Question 3 out of 1 points se the following inforrnation to answer the question

Question

Question 3 out of 1 points se the following inforrnation to answer the question below the information above. Which of the following equals the annual growth rate of "ellective labor" in the steady state in this economy? Selected Answer 1 the rate of deprecat on 1s 10% per year, 2 the population growth rate s 2% per year, and 3 the growth rate of technology s % per year Rele to 2% 396 5% 10% 15% Question 4 0 out of 1 points Use the following information o answer he questions below the rate o depreciation s 10 per year, 2 the popu ation grow rates 2% per year, an a gr ate e nolo y s per ear. Reer to the information above. Which of the following represents the level of investment needed to maintain a constant capital stock (K) in this economy? Selected Answer 15K Answers 02K 03K 05K 10K 15K

Explanation / Answer

1) Use the following information to answer the question below: 1) the rate of depreciation is 10% per year 2) the population growth rate is 2% per year 3) the growth rate of tecnology is 3% per year. Refer to the information above. Which of the following equals the annual growth rate of "effective labor" in the steady state in this economy

Solution: 5%

Working: Annual growth rate of ‘effective labor’ = the population growth rate + the growth rate of technology

2) Use the following information to answer the question below: 1) the rate of depreciation is 10% per year 2) the population growth rate is 2% per year 3) the growth rate of tecnology is 3% per year. Refer to the information above. Which of the following represents the level of investment needed to maintain a constant capital stock (k) in this economy?

Solution: 0.10k

Explanation: =0.01*Depreciation rate= 0.10k

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