Apec 3006 - Apec 3006 Yan Li Assignment 1 Chapter 2#3#4 Chapter 3#4#9#11#3 GDP falls When the woman employed the butler she paid him salary and this can

# Apec 3006 - Apec 3006 Yan Li Assignment 1 Chapter 2#3#4...

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Apec 3006 Yan Li Assignment 1 Chapter 2 (#3, #4) Chapter 3 (#4, #9, #11) #3, GDP falls. When the woman employed the butler, she paid him salary, and this can be accounted into GDP. If they got married, the woman doesn’t have to pay for him to buy the service, so the GDP falls. GDP as a measurement has its own limitation. Butler does same kind of job, but in second situation, his labor can’t be recognized as part of GDP. That’s to say, GDP can’t measure the actual situation sometimes. #4, a. Government purchases b. Investment c. Next export d. Consumption e. Investment #4, a. Y=AK^ α L^(1- α ) α =0.3 MPK= α AK^( α 1 ) L^(1- α ) MPL=(1- α ) AK^ α L^(- α ) Capital cost (Capital)=R*K=MPK*P*K= α Y K *P*K= α *YP Wage (labor)=W*L=MPL*P*L=(1- α ) Y L *P*L=(1- α ) YP So we can know that the fraction of capital receive is 0.3; the fraction of labor receive is 9-0.3=0.7 b. Y 2 Y 1 = 1.1 0.7 1 =1.07 So, the total output increases by 7%. The rental price (MPK) of capital increases, and the real wage (MPL) decreases.
c. K 1.1K, Y 2 Y 1 = ( 1.1 ) 0.3 =1.03, So, the total output increases by 3% The rental price (MPK) decreases, and the real wage (MPL) increases.

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• Spring '14
• McCullough,GerardJohn
• Macroeconomics, Gdp, gross domestic product, Value added, Final goods