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Consider the following production function: Y K.5 ( AN ) .5 , where both the population and the pool of labor are growing at a rate n .07, the capital stock is depreciating at a rate d .03, and A is normalized to 1.
a. What are capital's and labor's shares of income
b. What is the form of this production function?
c. Find the steady-state values of k and y when s .20.
d. At what rate is per capita output growing at the steady state? At what rate is total output growing? What if total factor productivity is increasing at a rate of 2 percent per year ( g .02)?
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n a given day, once you subtract 8 hours for sleep, you effectively have 16 hours from which you can choose to work or enjoy leisure (that is to say, sleep doesn't count as leisure). You have a job that pays $20/hour and that is your only source o..
Suppose that the government cuts net taxes by $10 billion. These are lump sum taxes. To keep its budget balanced at its current level, it also reduces its spending by $10 billion. Which summarizes the impact of the government's policy action on eq..
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