Economics 304L: Principles of MacroeconomicsSpring 2010SadlerHomework 31.In 1931, Babe Ruth was the highest paid player in Major League Baseball, earning an annual salary of$80,000, an amount that was unheard of at the time. In 2007, the highest paid player in baseballwas also a New York Yankee, Alex Rodriquez, who earned $27,000,000 that year. Which salary washigher in real terms? Go to the Fred database and use the Consumer Price Index for All UrbanConsumers: All Items (not seasonally adjusted) for June 1931 and June 2007 to determine the valueof Babe Ruth’s salary in terms of 2007 dollars. (http://research.stlouisfed.org/fred2/categories/9)Problems 2‐6 refer to the “Problems and Applications” section at the end of Chapter 12 of Mankiw (p.270).2.No. 33.No. 74.No. 85.No. 96.No. 107.Assume that the production function for the country of Longhornstan depends only on capital (K)and labor (L) inputs, and is given by the Cobb‐Douglas production function:ܻ ൌ ܣܭఈܮଵିఈ, whereAis the level of technology in Longhornstan.
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