B06-Tutorial4

Principles of Macroeconomics (with Xtra!)

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Unformatted text preview: Page 1 of 1 THE UNIVERSITY OF TORONTO AT SCARBOROUGH Division of Management ECM B06H – Macroeconomic Theory and Policy: A Mathematical Approach TUTORIAL #4 Q1. Suppose that the production function is Y = 20K 1/3 L 2/3 , and the depreciation rate is 2 percent. Assume that the rates of growth of population and technology both equal 0. a) The saving rate 15 percent and suppose capital per worker in the economy is 1,500. Is the economy in a steady state? If not, in what direction is the economy as measured by the capital stock per worker moving? Can you tell if consumption per worker rising, falling or staying constant? b) If the saving rate 15 percent, calculate the steady-state level of capital per worker, output per worker, consumption per worker, saving and investment per worker, and depreciation per worker. c) Find the Golden Rule level of capital per worker. What are the Golden Rule levels of output per worker, depreciation per worker, investment per worker, the rate of saving per worker, and consumption per worker.saving per worker, and consumption per worker....
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