HW4 - Homework 4 for Intermediate Macroeconomics-Due on 1...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Homework 4 for Intermediate Macroeconomics-Due on 10/12/2010 1. Consider an economy described by the following equations: 1 3 4 4 ( , ) 10 14 3.5 0.7( ) 15 0.5 F K L K L G T C Y T I r = = = = + = The supply of labor is fixed at L =81 and the supply of capital is fixed at K =16. a) Compute the output, the real wage rate and the real rental price of capital. How much is the total labor income and capital income? What fraction of total income does each factor of production receive? b) Compute the private saving, public saving and national saving? c) Find the equilibrium interest rate and investment. d) Now suppose that G rises to 12. How does this affect total output? Compute the private saving, public saving and national saving. e) Find the new equilibrium interest rate and investment. 2. Consider the Cobb-Douglas production function with two inputs: capital K and labor L. It is 2 1 3 3 ( , ) Y F K L K L = = The firm sells its goods at price P, pays a nominal wage W to every unit of labor it hires and pays a nominal rental price R for every unit of capital it rents. a) Write down the expression for firm's profit, revenue and costs.
Image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern