Answer to Question #283976 in Macroeconomics for diliz

Question

1) Consider a country with an ICOR of 8.0 in which GDP rises by 4% per annum to prevent a decline in per-capita income. This requires a saving rate of

 

2) For an economy’s output function, where y=(Y/L) and k = (K/L), what statement best describes it?

 

3) In a steady-state economy with no population growth, capital per worker is 80, the saving rate is 25 percent, and the depreciation rate is 12.5 percent. The level of output per worker is ________

 

4) What is true regarding the situation when k = k*?  

5) What is the condition required for k = k* to become a golden rule steady state equilibrium level of k?

 

 

 

Answer 1

$Solution$

1)Rate of growth of GDP = Savings ratio / capital output ratio

Therefore saving rate is $8.0\times 4=32\%$

2)solows growth model. It gives the output to capital .

3)80+17.5=97.5

4) it should be less than or equal to zero

5)MPK, net of depreciation, is zero.