Consider an economy in which production characterized by, Ask an Expert

Economics

Consider an economy in which production characterized by the neoclassical function Y=K^.5N^.5. Suppose, again, that it has a saving rate of .1, a population growth rate of .02 and a average depreciation rate of .03.

A. Write this production function in per capita form, and find the steady state values of k and y.

B. At the steady-state value of k, is there more or less capital than the golden-rule level?

C. Determine what saving rate would yield the golden-rule level of capital in this model.

D. In the context of the neoclassical growth model, can a country have too much saving?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91408000

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