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- Correct Answer You Answered Question 2 Consider the following Malthusian Model. Suppose that output in the economy is described by Y = √X√L. with Y being aggregate output, X being the total amount of land, and I being the total amount of labour. The amount of land is fixed at 17,920. Suppose you are also told that the relationship between consumption per worker and labour is: Lt+1 = = (c - 15) × Lt. What is the steady state level of labour L* here? (Hint: what is Lt+1 in the steady state?) Lt 70 Ⓒ90 802) The below five graphs show the development of key macroeconomic variables over the scope of three years in a certain country. Use them to draw an IS-LM-PC graph that captures the development in this country. Explain carefully what has happened. G Y t 3) China currently (2016) has a household saving rate of about 36 %. It has never been below 27 % in the last 30 years. What role do you think this high saving rate has for China's economic success? It has been argued that the low standard of living in many less developed countries depend on their poor institutions. Explain carefully what kind of "institutions" this argument refers to. 4) 5) The Swedish Fiscal Policy Council discusses public debt policy in a low interest environment in their latest report. The argue that "there are strong arguments in favour of low public debt despite low interest rates. For private operators, it may be rational to increase debt in a low interest rate climate, but this is not necessarily the case for…Which of the following is not a variable of interest in macroeconomics? O the level of planned investment the overall level of employment the overall level of prices the price of coffee
- 1. The Grossman model uses the economic concept of a production function. Before you dive deeply into the Grossman model though, I want you to think more generally about the concept of a production function as it relates to health status. A production function describes the relationship between inputs and outputs for a production process. For a business, the inputs are labor, capital, raw materials, etc. and the output is the finished product. The production function is often describe mathematically using an equation like the one below: Y = K¹/3L2/3 Where Y is the amount of output from using K units of capital and L units of labor. a. Now consider a production function for something very different: in the United States. That is, consider a average life expectancy production function where Y = life expectancy measured in years. What do you think are the primary inputs? That is, what are the variables on the right-hand side of the equation? Hint: think broad categories...and there are…In the set of the IS curve analysis, which of the following is an endogenous variable? Investment quantity Real interest rate Nominal interest rate Money supply quantity(ii) What is the relation between Kt and Ht? Use this relation to write down total output as a function of Ktonly. Imagine that the number of people in this economy, Nt, is different from the number of workers because some people do not work. Lt Let lt - be the number of workers per capita (the fraction of the population that works). Let y Nt Yt be output per capita and Nt Kt kt be capital per capita. Finally, let n be the rate of population growth and y, be the growth rate of labor. Nt (iii) Using the "effective production function" you derived in (b), write down output per capita, yt, as a function of capital per capita, kt, labor per capita, lt, the level of population Nt, and the level of technology, A. Following Solow and Swan, assume there is no government and no net exports, that the depreciation rate of capital is the constant 8 > 0 and the savings rate is constant 0 < s < 1. (iv) DERIVE the fundamental equation of Solow-Swan. How does the growth rate of capital depend on…
- a. List all the equilibrium conditions of this model and Using the equilibrium conditions listed, write down an expression that describes the evolution of the aggregate capital stock, Kt over time. Briefly explain why this expression is not particularly convenient for our analysis of the model? b.Using your answer to the above question, derive the equation that describes the evo- lution of the the capital stock per effective unit of worker, kt. ' Why is the analysis in terms of the variables per effective unit of worker more useful than the one with the aggregate capital stock? c. Assume that a E (0, 1). Draw a diagram that describes the evolution of kt, and show that there exists a unique steady state, k* > 0. Label properly. Find the expressions for the steady state variables k*, y*, and c* in terms of the parameters of the model. , Now, assume that α = 1. Draw a diagram that describes the evolution of kt, and show that income per worker can grow indefinitely in this case. Label…UESTION 5 Suppose the parameters of the Romer model take the following values: A=10, 7 =0.01, 7=1/500, and L= 100,000. what is the growth rate of this country's economy? OA. 0.2 percent O B.2 percent OC. 200 percent O D.20 percent LC 100ml U R - Eter G H D Look B N M rol Alt Al Contral AnnExplain the importance of macroeconomics in an economy
- Assume that a E (0, 1). Draw a diagram that describes the evolution of kt, and show that there exists a unique steady state, k* > 0. Label properly. Find the expressions for the steady state variables k*, y*, and c* in terms of the parameters of the model. , Now, assume that α = 1. Draw a diagram that describes the evolution of kt, and show that income per worker can grow indefinitely in this case. Label properly.Consider an economy in which production is characterized by the neoclassical productionfunction:Y = K0.5N0.5Suppose that it has a saving rate (s) of 0.1, a population growth rate (n) of 0.02, and an average depreciationrate (d) of 0.03.a) Write this production function in per capita form, and find the steady-state values of per capitacapital k and per capita output y.b) At the steady-state value of k, is there more or less capital than at the golden-rule level?c) Determine what saving rate would yield the golden-rule level of capital in this model.Hey! Need help with the following Macroeconomics question, it contains four small sub-questions. Thank you in advance! In this question, use what you learned in the second part of the chapter to compare the performance of an economy in two different time periods, as a result of changes in its physical capital stock and efficiency units of labor. Suppose that from period 1 to period 2, the unemployment rate in the economy increases. Everything else remains unchanged. What happens to the total efficiency units of labor? Express your results formally as an inequality, using the formula for total efficiency units of labor presented in the chapter (in particular, recall that total efficiency units of labor in two periods can be written as and , where L is the total number of employed workers). What are the consequences for GDP of this increase in unemployment? Express your results formally as an inequality, using the aggregate production function presented in the chapter. What are the…