Hi,

Just looking for some help with these problems. It dosn't have to be perfect, just looking for some good solid fundamentals.

Let me know if your interested.

Cheers.

information is attached and copied below
Instructions
Answer all questions. You must show your work to receive credit. The work handed in
should reflect individual effort.
1. Consider an economy with the production function
Y = AK2=5N3=5: (1)
(a) Suppose the economy is growing at an average rate of 3.5% per year, K growing at 4%, and
N growing at 2%, what is the growth rate of total factor productivity (A) for the economy?
(b) Demonstrate that the per capita production function for this economy is
y = Ak2=5: (2)
(Note: To Ã¢â‚¬Å“demonstrateÃ¢â‚¬Â, you need to perform the mathematical steps to derive (2) from (1).)
(c) For n = 0:05, d = 0:2, s = 0:4, A = 5, what are the Steady State values for y, i, c, and k?
(d) Draw the per capita production function and supporting curves to capture the economy at its
steady state.
(e) Changing attitudes toward marriage and family leads to a decrease in the population growth
rate to zero. Compute the new steady state values and include the impact of this change on
your figure for (1d).
(f) Include a plot of the evolution of y, i, c, and k over time as the economy adjusts from the old
steady state to the new steady state.
(g) Provide a brief economic explanation of the consequence of lower population growth rate for
per capita consumption and why. An economic explanation should be devoid of math and
should not reference the figure.
(h) Provide a brief economic explanation of the consequence of lower population growth rate on
long-term growth rates.
(i) Demonstrate mathematically that the Golden Rule savings rate for this economy is sg = 2=5.
(Note: The starting-point formula can be found in the lecture 4 slides. You need to show the
mathematical steps to obtain the objective, sg = 2=5)
(j) Starting from the original steady state, if there had instead been an increase in savings, what
direction would consumption have changed? Explain your answer

Subject |
Business |

Due By (Pacific Time) |
03/18/2015 10:00 pm |

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