thereroré écohomic groWth? Suppose you are given the information below. Use the

Question

thereroré écohomic groWth? Suppose you are given the information below. Use the Solow Model with Technology to answer the questions. 3. F(K,L) K-25,000 L-5,000 A-1.25 s-0.01 n-0.05 d-0.10 0-0.20 K * (A * L) a. b. c. d. Calculate total output. Show your work. Calculate output per effective worker. Show your work. Calculate capital per effective worker. Show your work. Calculate change in capital stock per effective worker. Show your work. ECON 359 - Development Economics Homework 4 Calculate the new level of capital stock in the next period. What does the Solow Model with Technology imply about changes in capital per effective worker and therefore economic growth? e. f.

Explanation / Answer

Ans a)

Total output=y=K(AL)=25000(5000*1.25)=$156250000

Ans b)

Output per labour=Y/L=AKL/L=AK=(25000*5000)=$125000000

Ans c)

Capital per worker=K/L=25000/5000=5

Ans d)

Change in capital stock per effective labour=

change in k=i-(d+n)k=sy-(d+n)k=0.01(125000000)-0.15(5)=124999999.25

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