Assume a production function, Y = KαL1 – α.. Assume constant population growth (n). In the...

Assume a production function, Y = KαL1 – α.. Assume constant population growth (n). In the Solow model, the steady-state level of output per worker is a function of:

a. productivity.

b.population, the depreciation rate, and the saving rate.

c.poverty, productivity, and the saving rate.

d.poverty, productivity, and the depreciation rate.

e. poverty and the steady-state level of capital stock.

Expert Solution

a) Productivity is derived from the output of goods and services which is signified from the production function KAL 1-A A measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.Productivity is the difference between various productivity measures is also usually related (directly or indirectly) to how the outputs and the inputs are aggregated into scalars to obtain such a ratio-type measure of productivity.It describes various measures of the efficiency of production. Often, a productivity measure is expressed as the ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input.

b) It examine the economic determinants of population change and demographic behavior including household formation, marriage, child bearing and rearing, mortality (and especially infant mortality) and key forms of human capital investment including schooling and migration. We will apply analytical tools of economics to investigate various economic and social consequences of population change.population economics is the application of economic analysis to demography, the study of human populations, including size, growth, density, distribution, and vital statistics.Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy. Depreciation represents how much of an asset's value has been used up. Depreciating assets helps companies earn revenue from an asset while expensing a portion of its cost each year the asset is in use. If not taken into account, it can greatly affect profits.The depreciation rate is the percent rate at which asset is depreciated across the estimated productive life of the asset. It may also be defined as the percentage of a long term investment done in an asset by a company which company claims as tax-deductible expense across the useful life of the asset.avings rate measures the amount of income that households, businesses, and governments save. It is an economic indicator tracked by the U.S. Commerce Department's Bureau of Economic Analysis . It essentially looks at the difference between the nation's income and consumption and is a gauge of a nation's financial health, as investments are generated through savings.

c) Poor families around the world spend a large fraction of their income consuming goods that do not appear to alleviate poverty, while saving at low rates. We suggest that individuals care about economic status and hence we interpret this behavior as conspic-uous consumption that is intended to provide a signal about unobserved income. We show that if human capital is observable and provides some information about income, a signaling equilibrium can emerge in which expected expenditure on conspicuous con-sumption as a fraction of total income is decreasing with income. This equilibrium results in an increasing marginal propensity to save that might generate a poverty trap. Methods of computing depreciation, and the periods over which assets are depreciated, may vary between asset types within the same business and may vary for tax purposes. These may be specified by law or accounting standards, which may vary by country. There are several standard methods of computing depreciation expense, including fixed percentage, straight line, and declining balance methods. Depreciation expense generally begins when the asset is placed in service.Productivity is a crucial factor in production performance of firms and nations. Increasing national productivity can raise living standards because more real income improves people's ability to purchase goods and services, enjoy leisure, improve housing and education and contribute to social and environmental programs. Productivity growth can also help businesses to be more profitable

d) The savings rate is the ratio of personal savings to disposable personal income and can be calculated for an economy as a whole or at the personal level. The Federal Reserve defines disposable income as all sources of income minus the tax you pay on that income.Productivity has t be measured in terms of saving rate and there are different levels of output which needs to be anaylsed for the levels of output . Production function relates physical output of a production process to physical inputs or factors of production. It is a mathematical function that relates the maximum amount of output that can be obtained from a given number of inputs – generally capital and labor.The production function describes a boundary or frontier representing the limit of output obtainable from each feasible combination of inputs.

e) The poverty threshold, poverty limit or poverty line is the minimum level of income deemed adequate in a particular country. Poverty line is usually calculated by finding the total cost of all the essential resources that an average human adult consumes in one year.The poverty rate is the ratio of the number of people (in a given age group) whose income falls below the poverty line; taken as half the median household income of the total population. It is also available by broad age group: child poverty (0-17 years old), working-age poverty and elderly poverty (66 year-olds or more). However, two countries with the same poverty rates may differ in terms of the relative income-level of the poor.The steady state is defined as a situation in which per capita output is unchanging, which implies that k be constant. This requires that the amount of saved output be exactly what is needed to (1) equip any additional workers and (2) replace any worn out capital. The steady state is defined as a situation in which per capita output is unchanging, which implies that k be constant. This requires that the amount of saved output be exactly what is needed to (1) equip any additional workers and (2) replace any worn out capital.

Rahul Sunny answered 2 months ago

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