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a. if the labour and capital grow at 1 percent per year what would the growth rate of total factor productivity have to be?
b.what if both the labor and stocks are fixed?
2) Consider the following production function: Y=K^0.5(AN)^0.5, where both the production and pool of labor are growing at a rate n =.07, the capital stock is depreciating at a rate d =.03 and A is normalized to 1.
a. What are capital's and labor's share of income?
b. What is the form of this production function?
c. Find the steady state values of k and y when s=.20.
d. At what rate is per capita output growing at the steady state? At what rate is total output growing? What if total factor productivity is increasing at a rate of 2 percent per year (g=.02)?
b. How does the response of the interest rate to a change in the money stock depend on the interest sensitivity of money demand?
C=0.8(1-t )y
t= 0.25
I=900- 50i
G=800
L=0.25y - 62.5 i
M/P =500
a. What is the equation that describes the IS curve?
b. What is the general definition of the IS curve?
c. What is the equation that describes the LM curve?
d. What is the general definition of the LM curve?
e. What are the equilibrium levels of income and the interest rate?
Continue with the same equations.
a. What is the value of aG which corresponds to the simple multiplier (with taxes) of Chapter 10 ?
b. By how much does an increase in government spending of DG∆ nincrease hte evel of income in this model, which includes the money market?
c. By how much does a change in government spending of D∆G affect the equilibrium
nterest rate?
d. Explain the difference between your answers to parts a and b .
a) Define the term `recession` What are its symptoms ? [ 4 marks ]
b) Explain the level and types of unemployment that you would expect to become more prominent in a recession. [ 4 marks ]
c) Using a AD-AS diagram, explain how an economy recovery from a recession. [ 10 marks ]
Consumption =40+0.75Y
Investment =140-10i
Government expenditure =100
Tax =80
Money deposit =0.2Y-5i
Money supply =85
(i)Find equilibrium, Y, I ?
Between 2011 and 2016, UK unemployment fell from a high of 8.5% to 4.8%. Some argue that
Government attempts to reduce unemployment inevitably lead to trade-offs with other
macroeconomic policy objectives.
1. Explain how government policies can reduce the natural rate of unemployment.
Assume you are managing a firm that recently entered in the transportation service, which
is meter taxi service similar with Ride, Feres and others. If you have to estimate the
demand for the transportation service you provide,
•The expansion path indicates optimal input combinations, but it does not indicate the specific rate of output associate with that rate of input use.
•The output rate is determined by substituting n for the expansion path into the original production function.
•Next step
•Assume Q = 1000, w = Rs. 4 and r = Rs. 2, Determine efficient factor combination.
Consider the following game. Suppose that players play simultaneously over many periods. In each period, each player best responds to the action played by the opponent the period before.
L M R
U 0,0 4,5 5,4
M 5,4 0,0 4,5
D 4,5 5,4 0,0Assume that in period 1, players start with the strategy profile (M, L). Describe playing in the next 7 periods. Does a pattern emerge?
What is a liquidity trap? If the economy was stuck in one, would you advise the use of mon
etary or fiscal policy?
#339914 on Dec 2023