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Consider the following continuous-time neoclassical growth model:
(a) Define and characterize a competitive equilibrium for this economy.
(b) Prove that the equilibrium is Pareto optimal.
(c) Show that if σ ≤ 1, sustained growth is not possible.
(d) Show that if A and σ are sufficiently large, this model generates asymptotically sustained growth because of capital accumulation. Interpret this result.
(e) Characterize the transitional dynamics of the equilibrium path.
(f ) What is happening to the share of capital in national income? Is this behavior plausible? How would you modify the model to ensure that the share of capital in national income remains constant?
(g) Now assume that returns from capital are taxed at the rate τ . Determine the asymptotic growth rate of consumption and output.
Suppose the government reduces taxes by $20 billion, that there is no crowding out, and that the marginal propensity to consume is 3/4. 1. What is the initial effect of the tax reduction on aggregate demand
a. Determine the Equivalent Annual Costs of the two alternatives and recommend the economically superior system.b. Determine a Salvage Value for the Beta system such that the Beta system will have an Equivalent Uniform Annual Cost equal to the Alph..
a. Use a T-Account to show the impact of this transaction on the FNB's balance sheet. The funds a bank has on deposit at the Fed count as part of its reserves. b. Assume that before receiving the discount loan, FNB has no excess reserves.
Two firms, Rattler and Sidewinder, produce and sell snakeskin cowboy boots. The following payoff table represents profits in millions of dollars for a simultaneous pricing decision between the two firms.
suppose you purchase a corporate bond with a 0-year maturity, a $1000 par value, a 10% coupon rate, and semiannual interest payments. This means that you receive a $50 interest payment at the end of each six-month period for 10 years (20 times).
Will the total revenue on any day be normally distributed?
Dakota Hi-C steel signed a contract that will generate revenue of $210000 now, $222600 in year 1, and amounts increasing by 8% per year through year 5. calculate the future worth of the contract at an interest rate of 8% per year
If Maruti Udyog is assumed to work in perfectly competitive market, then draw the graph of losses and also explain the features of perfectly competitive market.
Assume that a grower of flower bulbs sells its annual output of bulbs to an Internet retailer for $80,000. The retailer, in turn, brings in $125,000 from selling the bulbs directly to final customers. What amount would these two transactions added..
Suppose a country can produce a maximum of 10,000 jumbo airliners or 2,000 aircraft carriers. a. What is the opportunity cost of an aircraft carrier b. If another country offers to trade six planes for one aircraft carrier, should the offer be accept..
A Lathe was purchased on January 1, 2006 for $35,000 with an expected life of five years. The original salvage value was estimated to be $6,000 at the end of five years. MARR for this company is 8%.
to pay for college, you have just taken out a $1000 gov. loan that makes you to pay $126 per year for 25 years. however, you don't have to start making the payment until you graduate from college two years from now. why is the yield to maturity ne..
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