Macroeconomics Answers

Regina owns a tax accounting business that has 3 PCs. One PC wears out each year and is replaced. In addition, this year Jeannie will expand her business to 5 PCs. Calculate Jeannie’s initial capital stock, depreciation, gross investment, net investment, and final capital stock

Regina owns a tax accounting business that has 3 PCs. One PC wears out each year and is replaced. In addition, this year Jeannie will expand her business to 5 PCs. Calculate Jeannie’s initial capital stock, depreciation, gross investment, net investment, and final capital stock

With the aid of graph,illustrate the effect of a change in demand for chicken by restaurant to chicken farmer

he South African Reserve Bank (SARB) has, in an unprecedented move, reduced the repo rate from 6.75% to 3.75% in a very short period. Use an appropriate diagram to illustrate and explain the likely effects of reducing the repo rate on output and inflation in South Africa, assuming that the economy was initially operating at less than full employment

Consider an economy in which the labour force grows by 2.7 percent per annum, physical capital grows by 4 percent per annum and human capital grows by 1.8 percent per annum. Suppose 45 percent of national income goes to labour and 40 percent to capital. Use a constant returns to scale production function to answer the following growth accounting questions:

(a) If the Solow residual were zero what rate of growth would the economy achieve?

(b) The country's actual rate of growth has been 4.5 percent per annum, which is faster than the growth rate generated by the accumulation of capital and labour stocks. Calculate the value of the residual.

Consider an economy with the following aggregate production function: Y = 3K1/3(AL)2/3

Capital grows through investment but also decays due to wear and tear at a constant rate δ per period. Assume that A is growing at the exogenous rate g, that L is growing at the exogenous rate n, and that households save a constant proportion s of their income.

(a ) Find the steady state level of the capital per effective worker (k*), output per effective worker (y*) and consumption per effective worker (c*) - in terms of the parameters of the model.

(B) What is the level of k (k**) that maximizes consumption? 

(C) Given a depreciation rate of 7%, population growth rate of 2%, technological progress of 1% and a saving rate of 30%, calculate the steady state levels of k, y and c.

(D) To move to the level of capital that maximizes consumption, how should the saving rate be changed? Explain. 

(E) Calculate the saving rate needed to reach the golden rule level of capital per effective worker.