Economic Planning (552) I. Over the past year, productivity grew by 19 capital g

Question

Economic Planning (552) I. Over the past year, productivity grew by 19 capital grew by 0%, and labor grew by 5%. If the elasticities of output with respect to capital and labor are 0.4 and 0.6, respectively, how much did output grow? A. a rightward moveme worker curve and ar labor ratio. nal Exanm mic Planning (5 ahzad Mirza B.. no change in the lon C.. a downward shift curve and a decreas D.. a leftward movem worker curve and D., 496. labor ratio. uctions: Attemp 2. If the capital-labor ratio is above the Golden Rule6. All else being equal, such a golden rate are cumu Explain. capital-labor ratio, then in the steady state, A.. capital per worker is above its maximum. B.. output per worker is less than it would be at saving rate in a st cause the Golden Rule capital-labor ratio. A.. an increase in t Derive the f diagrams. H 3. How does detail the t 4. List the si increase in cons C.. investment per worker exceeds output per B.. an increase in worker D.. consumption per worker is not at its decrease in con C.. a decrease in maximum. decrease in con increase in co 7. An increase in p i 3.lf/(k) = 2k05, s D.. a decrease in 0.1, n = 0.1, x = 0 and depreciation = 0.05, what is the value of/(k) at adopt to are the e equilibrium? in th 0.6. What is equilibC.. 2 achievD.. 8/3 and a A.. fall; fall -B.. fall; rise Q.7. Differ and/o conv The Solow model demonstrates that A.. in the absence of productivity growth, C.. rise; rise D. rise; fall 4· economic growth will turn negative in the8. Unconditional long run. Q.8. Con gre B. in the absence of productivity growth, A. living stan of countrie B. living stan that havet long run, economic growth will reach a steady state of zero per capita growth in the long run. a. C.. productivity growth must exceed the rate of growth in the population to avoid a steadyC.. living star state in the long run. D.. productivity growth will inevitably decline same. due to diminishing marginal productivity. D.. difference the worl 5. An earthquake destroys a good portion of the 9. Conditional capital stock. How would you expect this to affect the capital-labor ratio in the long run? There would be: run, A.. living st of count

Explanation / Answer

1. (C) as the elasticity of labour is 0.6 and labour grw up by 5%. i.e., 0.6*5%

2. (C) is the right answer because investment will exceed the output in this case.

3. (B) is the right answer as this question can be solved from the options. Enter each option into the equationto check which gives the right value of k.

4. (B) is the right answer because economies converge to their steady state equilibrium.

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