Assignment 5

# Assignment 5 - 1 a If their rates of education growth are...

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Macroeconomics 314 Assignment 5 Numerical Problems: 6. a. n=.01 y=6k^.5 d=.14 s=.1 sf(k)=(n+d)k (.1)(6k^.5)=(.15)k k=16 y=6(16^.5) y=24 c=f(k)-(n+d)k c=24-2.4=21.6 investment per worker is (n+d)k=2.4 b. k=16 k^.5=4 8=k^.5 (if y=48) k=64 s(48)=(.15)64 s=.2=20% 7. a. n=.01 C=.5(1-t)Y y=8(k^.5) d=.09 g=0 t=0 investment per worker is (n+d)k=.1k sy=(n+d)k s=(.1)k/(8(k^.5))=(.013)(k^.5)

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C=.5Y c=.5y .5y=y-.1k (.5)8(k^.5)= 8(k^.5)-.1k k=1600 y=8(k^.5) y=320 c=160 i=160 b. C=.5(1-.5)Y C=.25Y c=.25y .1k=(.75)8(k^.5) k=3600 y=8(k^.5) y=480 c=.25y c=120 i=360 Analytical Problems: 2. a. Long-run output per worker, consumption per worker, total capital stockpile, and capital per worker all fall, because more output must be used to replace capital. b. The growth rates of output, capital, consumption are all reduced, because more investment must be devoted to replacing capital rather than to creating human capital. 6. Additional Question:
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Unformatted text preview: 1. a. If their rates of education growth are similar their total income will grow at the same rate. If their rates of education growth are different the country with the faster education growth rate will have a higher growth rate of total income. It is likely that the less educated country will experience a higher education growth rate and thus total income growth, because it has more room for improvement in its education. b. The level of income will be higher in the more educated country regardless of the education growth rate. c. The wage will be higher in the more educated country regardless of the education growth rate. 2. My answers would remain the same. 3. A would be higher in the more educated country. A would be growing faster in the country with the higher education growth rate...
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## This note was uploaded on 05/06/2008 for the course ECON 3140 taught by Professor Mbiekop during the Fall '07 term at Cornell.

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Assignment 5 - 1 a If their rates of education growth are...

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