Assume an economy has the following production function: Y=F(K,L)=K0.4L0.6
a. State the per-worker production function.
b. If the savings rate is 0.2 and the depreciation rate is 0.05, calculate the steady-state capital stock per worker, output per worker, and consumption per worker.
c. Now suppose the government increases spending, reducing the country's savings rate to 0.1. Redo the calculations in (b) based upon this change. What is the effect on the government spending on the economy.
Recently Asked Questions
- Question 4: States of Matter (12 points) a. Compare solids, liquids, and gases in terms of the way each substance's volume changes (or doesn't change) when
- Please refer to the attachment to answer this question. This question was created from Lab1. Additional comments: "I don't know how to deal with this part,
- Please refer to the attachment to answer this question. This question was created from Reading Quiz 4.pdf.