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The parameter α in the Cobb-Douglass technology function is sometimes referred to as representing “capital’s income share in production”. Rearrange one of the two expressions
Your output should follow the format suggested in the table below where C/Y is consumption as a percentage of nominal GDP, I/Y is Gross Investment as a percentage of nominal GDP, B/Y is Government P
Question 1. Suppose that the production function for an economy is given by Y = F(K, L) = AK1/2L1/2 Where Y is output, A is the level of technology, K is capital and L is labor.
Calculate the GDP deflator using first 1980 as the base year and then 2000 as the base year. Collect your findings in the following table.
For a small, open economy, if there is an increase in the level of national savings for a given level of investment, then the Classical Model suggests that this economy will
Suppose an economy’s production is described by a Cobb-Douglas production function. If the amount of labor used increases, holding everything else constant, this will
Derive an equation for the investment demand function for this economy where investment is expressed as a function of the interest rate r. Write your equation in the form I = I (r). Base your equati
What is the equilibrium value of real GDP and the interest rate for this economy?
A country’s real exchange rate increases. Holding everything else constant, this implies that this country
Suppose the goal of policy makers in an economy is to reduce the NAIRU. Which policy is most likely to achieve this outcome?
Use the following graph of a small open economy with perfect capital mobility to answer the next question.
You are given the following information about an economy's long run aggregate production function. This production function is a Cobb-Douglas production function with constant returns to scale. Fur
Use the following information and your knowledge of the relationship between the marginal product of an input and its real price, to calculate the amount of labor and the amount of capital hired in
In the Solow growth model with population growth and technological change, whenever the marginal product net of depreciation is greater than the sum of the rates of population growth and technologic
Consider a closed economy with consumption given by the following equation. C = 100 + (2/3) (Y-T) In addition, suppose that planned investment expend iture is 300 and that the government runs a bala
With the production function in a), fill out the first row of the table above. Again using the production function from a), find the steady state level of capital in this economy.
A small economy, which historically has been closed to capital flows and trade, is holding a democratic election for the very first time. There are three candidates for president, each with differen
Write down the firm’s profit function based on the information above, and find the necessary conditions for profit maximization
To check the accuracy of these approximations, compute the actual share of each variable in GDP and find the actual growth rates. Present your answers in a table as below. Put the growth rates
What happens to Jamaica’s level of net exports, real exchange rate, equilibrium interest rate, and the equilibrium quantity of investment?
Compare the current steady state values of consumption per worker, investment per worker, and output per worker to those at the Golden Rule steady state.
a) What is the level of output in the economy? Show your work. b) What is labor productivity and (the average) capital productivity at this level of output? Show your work.
What are the four different ways of calculating GDP as described in class and mentioned in the book? Describe double counting and how it relates to the calculation of GDP.
1.1 If the economy is initially in long-run equilibrium, what are the values of PLR;1 and YLR;1? 1.2 What is the velocity of money in initial long-run equilibrium (PLR;1 ;YLR;1)?
Small Open Economy Coconut Island, a small economy, is closed to capital flows and international trade. The nation is holding a democratic election.