Let the Macro system be characterized by the following: 1. What is the net produ

Question

Let the Macro system be characterized by the following: 1. What is the net product? 2. What are the three productivity parameters? Define them and provide for you numeric example. 3. What is the net output capital ratio also equal to on the profit side? On the growth side? 4. Set up the equations for the income and output account in general using the net product T-table. Be sure to especially give the formulas for the profit rate and growth rate 5. Let the wage share = w= 1/3. Provide the income account equations and draw the wage-profit schedule. 6. Map the system between accounts the savings propensity out of profit revenue B pi=1/2 and the savings propensity out of wage revenue Bw=0. Provide the output account equations and draw the consumption-growth schedule. 7. Combine the wage-profit schedule in #5 with the consumption-growth schedule in #6 in the two quadrant graph.

Explanation / Answer

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Question 1-3 have been answered below for your reference.

1.

Net product shows the production function for the given question.

In the given case, it can be stated as:

            Q=F(L,K)

Since Q = 16, thus net product = 16

2.

Productivity parameters are: r (price of capital), w(cost of labor) and P(price of output produced)

3.

Net output to capital ratio = Q/K = 16/10 = 1.6

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