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Discuss the difference between economies of scale and diseconomies of scale.
Discuss the relationship between marginal product and marginal cost.
Explain the difference between fixed costs and variable costs.
When saving = Investment, show that the trade balance equals the government spending balance?
When saving = Investment, show that the trade balance equals the government spendig balance
What is the theory of New Keynesian economists
Qno.2 Assume that an economy is initially operating at the natural rate of output (full employment output). Use the AD-AS model to illustrate graphically the effects on price and output of an increase in government spending and a decrease in the cash rate. Explain your assumptions with respect to the range of aggregate supply of your analysis.
What is meant by state in the solow model? Explain how golden rule is different from steady state.
Consider following information from the Solow model in a continuous time, π = ππ
π β ππ,
πΜ = ππ(π) β (π + π + πΉ)π, π = π + π, where π =
π²
π¨π³
, g-is growth of technology, n-is labor force
growth rate, and πΉ- is rate of depreciation. Answer the following questions-
(i) What are the assumptions this production function violates? (1 Mark)
(ii) Find out the steady state and golden rule solution of π
β
, π¦
β
, π
β
? (2 Marks)
(iii) Find out the steady state and golden rule solution of per capita capital, output ratio and
consumption?
Consider the Cobb-Douglas production function in continuous time, π(π) = π²(π)
π
π(π―(π))
π
π,
π―(π) = π(π)π³(π), πΜ(π) = ππ(π(π)) β (ππ¨ + π + πΉ)π(π),
π¨Μ(π)
π¨(π)
= ππ¨,
π³Μ(π)
π³(π)
= π π(π) = π(π) +
π(π) + π(π), where, π(π) = ππ(π) and π > π. Answer the following questions-
(i) Derive the intensive form production function in per-capita terms. (1 Mark)
(ii) what is the steady-state and Golden-rule level of capital-output ratio and consumption? (2
Marks)
(iii) Explain the effect of government expenditure on output at the golden rule
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#339914 on Dec 2023