Econ 100B: Economic Analysis – Macroeconomics
Problem Set #2
Due Date: July 10, 2020
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1. Write out the steps need to show that the last equation on slide 21 of lecture 5 follows
from the first equation on the same slide.
Hint 1: A review of the first 2 pages of
has some helpful hints.
Hint 2: the expression for
can be written as
2. The variable
is capital per worker per unit of worker efficiency, or capital per worker
modified to reflect the difference in efficiency among workers. Consider two countries,
A and B, with labor efficiencies
= 1 and
= 2, respectively.
(a) If the size of the labor force is the same in each country and
is the same in each
country, which country will have a larger aggregate capital
in steady state?
(b) Given your answer to question
above, briefly explain why
provide a better
measure of the capital per worker needed in an economy.
3. By how much does the half-life shown on slide 10 of lecture 6 change if
4. Briefly explain the reason each of the bullet points below for the shock in the saving
rate shown on slide 12 of lecture 6.