Assume that the growth rate of the capital stock in each period is determined by

Question

Assume that the growth rate of the capital stock in each period is determined by the level of output in the previous period.

1) An economy of 80 million people has ten percent of them engaged in research and development, where their productivity is 0.0035. The economy is on a balanced growth path, when suddenly 2.88 million people move from goods production into R&D, raising the fraction there to 13.6 percent. In the one period that begins with this labor reallocation, the growth rate of output is ________. [Refer to the instruction above.]

A) 2.8%

B) 0.0%

C) 3.8%

D) 2.2%

2) An economy of 82 million people has twenty percent of them engaged in research and development, where their productivity is 0.003. The economy is on a balanced growth path, when suddenly the productiveness of R&D rises to 0.004. For the one period that begins with this productivity increase, the growth rate of output is ________. [Refer to the instruction above.]

A) 8.7%
B) 9.4%
C) 6.6%
D) 7%

3)

An economy of 25 million people has twenty percent of them engaged in research and development, where their productivity is 0.0056. The economy is on a balanced growth path, when suddenly a wave of immigration raises the population to 27 million. Assume that the new workers are immediately "on the job," and that the fraction engaged in R&D remains twenty percent. For the one period that begins with this population increase, the growth rate of output per person is ________. [Refer to the instruction above.]

A) 4.3%
B) 1.8%
C) 3%
D) 8%

Please show me the calculation step by step in each questions, and use the data provided in the question to slove it , Thank you:)

Explanation / Answer

1) answer is D.

2) answer is B.

3) answer is B.

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