Econ2102S2_Tutorial_2s[1]

Hint think about what happens to consumption q2 do

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Unformatted text preview: if from were to grow at a constant rate over time. (d) How is the response of the economy to an increase in TFP different to an increase in the investment rate? (Hint: Think about what happens to consumption). Q2. Do exercises 2 and 8 from Chapter 5 of Jones. Question 5.2 (a) (a) Y K*(0) K*(1) K 5 the stock of capital tends increase. As the capital stock evolves towards K*(1) the growth rate of capital (and of output) will slow and eventually cease once the new steady-state level of capital has been reached. (b) The increase in technology has two effects on output per-capita. There is a direct effect via the production function and then a second effect that comes from higher The increase in The shift the saving/investment curve upwards (as will look like capital accumulation.A willpath of output (or output per-capita) over time shown above). It will also the following. shift the per-capita production function upwards as well (not shown above – but you should draw it in). It the transition period investment exceeds deprecation so the stock of capital tends increase. As the capital stock evolves towards Y(1) the growth rate of capital (and of output) will slow and eventually K*(1) The increase ease once the new steadyupwards (as shown above). It cin A will shift the saving/investment curve -state level of capital has been reached. will also shift the per-capita production function upwards as well (not shown above – but you should draw it in). It the transition period investment exceeds deprecation so the stock of capital tends increase. As the capital stock evolves towards K*(1) the growth rate of capital (and of output) will slow and eventually cease once the new steady-state level of capital has been reached. (b) The increase in technology has two effects on output per-capita. There is a direct effect via the production function and then a second effect that effect on output. This vertical section shows the direct comes from higher (b) The increase in technology has two effects on output per-capita.of output (or output per-capita) over time wil...
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This document was uploaded on 03/15/2014.

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