Consider a onetime change in government policy

Assignment Help Business Economics

Reference no: EM131004539

An increase in the labor force: Consider a onetime change in government policy that immediately and permanently increases the level of the labor force in an economy (such as a more generous immigration policy). In particular, suppose it rises permanently from L to L. Assuming the economy starts in its initial steady state, use the Solow model to explain what happens to the economy over time and in the long run. In particular, comment on what happens to the level and growth rate of per capita GDP.

Reference no: EM131004539

Questions Cloud

Monopoly power comes from market acceptance : Consider the statement, “Monopoly power comes from market acceptance, not from a patent, a prettier product, a slick advertising campaign, or anything else. So rather than spend your time in court, you should be out there drumming up business.” Do yo..

The market has a nash-cournot equilibrium : Two firms, each in a different country, sell homogeneous output in a third country. Government 1 subsidizes its domestic firm by s per unit. The other government intervention, the market has a Nash-Cournot equilibrium. Show that Government 1's optima..

Real interest rate higher lowreal interest rate : Given the nominal interest rate of 17?% and the expected inflation of 13?%, then the value of the real interest rate is ___ ? with the real interest rate equal to 3?% and the expected inflation equal to 4?%, then the value of the nominal interest rat..

What happens with no diminishing returns : What happens with no diminishing returns? Consider a Solow model where the production function no longer exhibits diminishing returns to capital accumulation. Draw the Solow diagram in this case. What happens to the growth rate of per capita GDP over..

Consider a onetime change in government policy : An increase in the labor force: Consider a onetime change in government policy that immediately and permanently increases the level of the labor force in an economy (such as a more generous immigration policy). In particular, suppose it rises permane..

Foreign aid exert a long-run effect on the welfare : Foreign aid: Consider a Solow economy that begins with a capital stock equal to $300 billion, and suppose its steady-state level of capital is $500 billion. Summarize what this exercise teaches you about the possible consequences of foreign aid. In t..

Present alternative definitions of sustainability : Present alternative definitions of sustainability. Give examples for each definition. Discuss the relationship between dynamic efficiency and sustainability. Analyze diagrammatically the effect of price ceilings on the market for natural gas utilizin..

Eliminate any further possibilities of triangular arbitrage : Given this information, is triangular arbitrage possible? If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000 to use. What market forces would occur to eliminate any furthe..

User Account

All Pages