midterm2003ak

midterm2003ak - 1 Economics 102 Midterm Exam Spring 2003...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Economics 102 Midterm Exam Spring 2003 Professor Lee Ohanian Answer Key Question 1: GDP=100, GNP=100, NNP=90, NI=80 Question 2: Y,C,G,T,I stays constant, r goes up. Question 3: a) Constant returns to scale implies zF(K,L)=F(zK,zL) In this case F(zK,zL)=z .25 K .25 z .50 L .50 =z .75 K .25 L .50 zF(K,L) =z . K .25 L .50 Hence, this function is NOT constant returns to scale b) MPL= .5*K .25 L-.50 =W/P MPK= .5*K-.75 L .50 =R/P c) Share of labor: (w/p*L)/Y=MPL*L/Y=.5*K .25 L-.50 *L/ K .25 L .50 = 0.5 Share of capital: (r/p*K)/Y=MPK*K/Y=.25*K-.75 L .50 *K/ K .25 L .50 = 0.25 S I 1 I I r r r 1 2 Share of profits: =Y-MPL*L-MPK*K /Y =Y/Y-MPL*L/Y-MPK*K/Y=1-0.50-0.25=0.25 Question 4: S OLOW M ODEL Equations: state steady in , ) ( ) ( = + + = + + = = = = t t t t t t t t t k g n sAk k g n i k sAk sy i Ak y Steady state value for capital stock: + + = + + = + + = + + = 1 1 1 ) ( g...
View Full Document

Page1 / 4

midterm2003ak - 1 Economics 102 Midterm Exam Spring 2003...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online