Answer to Question #283974 in Macroeconomics for diliz

Question

1) If the economy’s output function is given as , where y=(Y/L) and k = (K/L), the average productivity of capital diminishes as k increases.

2) Other things the same, in the Solow model in the steady state, a higher rate     of population growth leads to an increase in the level of output per worker.

 

3) While capital dilution lowers the value of k, capital widening raises the value of k in the Solow model.  

 

4) In the Solow model with technological progress, the growth rate of GDP is the same as the population growth rate and the savings rate.

 

5) If the production function is given as Y = L∙K, then it follows constant returns to scale.

 

6) When the output stays the same after the use of each input has been doubled, then the economy’s production function follows a constant returns to scale. 

Answer 1

$Solution$

1)true.....labor productivity remains constant hence productivity of capital diminishes as k increases

2)false... output per worker is contant unless there is advancement in technology,but total output increases.

3)true...Capital widening attempts to increase output through better technology and higher output per worker e.g by use of technology.

4)true..in the long run

5)true...increases inputs proportional to output

6)false...output should be proportion to input.