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A typical economy is described by the following equations: • Y = K 0.5 L 0.5 (production function) • b) s = 0.2 (saving’s rate) • c) d = 0.1 (depreciation rate) Using the Solow model, answer the following questions: a. What are the steady state values of k, y, c and i ? b. What are the values of k and y if the economy operates at the “Golden Rule” level of capital accumulation? Imagine that you want to “drive” this country in the “Golden Rule” levels of k and y. What is the saving rate that you have to impose? What would be the level of c? c. Assuming that you impose the new saving rate. What would be the immediate and long run effects on c, k, and y? Draw the path of these variables. *Note: The lower case letters denote per-capita variables (e.g. y = Y/L, k = K/L etc.)
Three months ago you purchased, at par, a $100,000 bond with a stated interest rate of 5%. Today, the Federal Reserve announced
You have just been appointed the new Economic Advisor to the U.S. Government and have been asked to develop an economic series of projections for the U.S. domestic economy for the next year. Outline your new forecast based on current developments.
Suppose that some foreign countries begin to subsidize investment by instituting an investment tax credit. What happens to the investment in our small open economy? What happens to our trade balance? What happens to our real exchange rate?
Find the value of X such that the loan is fully repaid with the last payment. b) What is the dollar amount of each of the five payments ? c) Find the value of all the intrest paid to ken ?
Firm is contemplating replacing a computer (D) it purchased three years ago for 6,000. In two years it will have a salvage value of $800. Operating a maintenance costs have been $1,000 per year. The computer currently has a trade in value of $3,000 t..
Profit Maximizing Rule: A firm maximizes profit by continuing to produce and sell output until Marginal Revenue (MR) = Marginal Cost (MC).
Suppose demand is still described by P=5.10-0.80Q and supply is described by P=1.90+0.20Q. If there are no price controls, what would be the equilibrium price?
Please answer the following questions and attach your answer as a word document. You may use the book to help craft your answer and there is no time limit other that it is due not later than the end of day, February 21, 2016. What is an economic ren..
Suppose the firm is operating in a high-wage country, where capital cost is $100 per unit per day and labor cost is $80 per worker per day. For every level of output, which technology is cheapest.
Describe the common allegation that when all firms in an industry are charging the same price, this indicates the absence of competition and the presence of someform of price-setting agreement
There are two firms A and B located in different regions that produce an identical good at zero cost. Each region is inhabited by a single buyer interested in purchasing at most one unit of the good. The RP of each buyer for one unit of the good is $..
Assume that an open economy Neverland is operating under a fixed exchange rate regime. Currently, Neverland’s economy is suffering a deep economic recession meaning that Neverland’s total output level is much lower than its medium-run output level.
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