What are the capital share

Assignment Help Business Management
Reference no: EM131237158

Consider an economy with an aggregate wage bill of 200 billion dollars and an aggregate GDP of 400 billion. The aggregate GDP growth rate for this economy over the last 10 years was 8 percent (that is Δ Y/ Y=0.08) and the growth rates of capital and labor were 5 percent (Δ K/ K=0.05) and 5 percent (Δ L/L=0.05) respectively.

(a) What are the "capital share (α)" and the "labor share (1-α)"?

(b) What was the growth rate of "A" for this country?

(c) Imagine now that aggregate GDP is the SAME, but the wage bill is 300 billion. What is the growth rate of productivity now if the growth rates of GDP, capital and labor are still .08, 0.05 and 0.05 respectively? Explain intuitively why your answer is or is not different from (b).

(d) Repeat part (b) under the assumption that Δ K/K=0.10. Explain intuitively why your answer is or is not different from (b). I understand a, but trying to wrap my head around b, c and d

Reference no: EM131237158

Questions Cloud

Draw a diagram showing variation of the investors profit : An investor buys a European put on a share for $3. The stock price is $42 and the strike price is $40. Under what circumstances does the investor make a profit?
What is the exchange rate in ghana now : What is the exchange rate in Ghana now?what is the economic stand of the country now....what is the average wage of a Ghanaian citizen?
Why the tones sound full and rich : Well, what do you think? If a tree falls in the forest and no one is around to hear it, is there sound? (See chapter-opening Factinos.) When one sings in the shower, the tones sound full and rich. Why is this?
Same percentage of any tax cut : Will consumers always spend the same percentage of any tax cut? Why might they spend more or less than usual?
What are the capital share : (a) What are the "capital share (α)" and the "labor share (1-α)"? (b) What was the growth rate of "A" for this country?
What is the effect when a system is driven in resonance : What is the effect when a system is driven in resonance? Is a particular frequency required? Explain. Would you expect to find a node or an antinode at the end of a plucked guitar string? Explain.
What type of gate would you put in the top event box : If you want to make a fault tree for this, what text would you put in the top event box? What type of gate would you put in the top event box?
Draw diagram showing the variation of the investors profit : An investor sells a European call on a share for $4. The stock price is $47 and the strike price is $50. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised?
What are the wavelength limits of the audible range of sound : Approximately how long would it take for a telephone signal to travel 3000 mi from coast to coast across the United States? (Telephone signals travel at about the speed of light.) What are the wavelength limits of the audible range of the sound sp..

Reviews

Write a Review

 

Business Management Questions & Answers

  What should be the size of the order

A large firm expects to require this product for the next 10 years at a rate of at least 140 per year. Fixed ordering cost is $30 and holding costs are based on 18-percent annual interest rate. What should be the size of the order?

  Audit committees and fraud risk management

Audit committees and fraud risk management.

  Discuss various aspects of cultural competence

Read the posts of your peers and respond to at least two. Develop and present follow-up questions or supporting statements that may help clarify their perspectives.

  Collective bargaining

Show both and provide an argument for which you would support (for or against). Why is this your stance?

  Negotiate contractual provisions without interference

Should parties be able to negotiate contractual provisions without interference from courts? Why or Why not?

  Application-patient safety risks

As noted in the Institute of Medicine report, To Err is Human, "It may be part of human nature to err, but it is also part of human nature to create solutions, find better alternatives, and meet the challenges ahead" (Institute of Medicine, 1999, ..

  Imc and customer satisfactionon-going to build your

imc and customer satisfactionon-going to build your marketing plan this assignment focuses on imc as well as customer

  Different in nature and function

How are training and development similar or different in nature and function? What is a specific example of how training and/or development can be used to create more productive and/or engaged employees in the workplace

  Describe kirk''s options and the legal arguments available

Describe Kirk's options and the legal arguments available to both sides and What is the likely outcome?

  Describe the relevance of the eps-ebit chart

Describe the relevance of the EPS/EBIT chart and why it is significant with respect to strategy implementation. Identify potential gaps in the product line or weaknesses in positioning.

  How do firms manage to mislead investors

In part, many corporate scandals center on misleading or inaccurate financial statements. Also, the financial crisis in 2007-08 period included corporate failures in the financial sector and enormous losses for investors. How do firms manage to mi..

  Synthesize information gained from analysis

This deliverable will require you to synthesize information gained from analysis.  Synthesizing information allows you to generate alternatives that can resolve significant problems or challenges facing an organization. Once the best alternative is i..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd