HW2 - University of Minnesota Department of Economics Econ...

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Unformatted text preview: University of Minnesota Department of Economics Econ 3102 – 001: Intermediate Macroeconomics Homework 2 This problem set (PS) is due on Wednesday, October 22 at the beginning of class. The maximum score is 100 points. Be sure to review the syllabus for details about homework assignments and their grading. Feel free to contact me via e-mail if you have specific questions about the HW assignment. Note that some Exercises have several parts, and each part may conceal more than one task for you. Be sure to answer every question thoroughly for full credit! Question 1 (20 points) Consider the Solow growth model and suppose that the production function is given by Y = K . 2 N . 8 where K stands for aggregate capital and N stands for labor. Moreover the population growth rate is equal to 2%, depreciation rate is 5% and marginal propensity to save is assumed to be equal to 21%. a) Find an expression for output per capita. b) Using the key equation derived in class, calculate k * . c) Calculate y * . d) Calculate c * e) What is the growth rate of K at the steady state? What is the growth rate of k at the steady state?...
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This note was uploaded on 04/25/2010 for the course ECON 312 taught by Professor None during the Summer '05 term at Amrita University.

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HW2 - University of Minnesota Department of Economics Econ...

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