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In: Economics

If the current stock of capital per worker is k = 50, the depreciation rate is...

If the current stock of capital per worker is k = 50, the depreciation rate is d = 0.1 and population grows at rate n = 0.02. How much investment do you need to make sure future capital per worker stays at the current level?

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Expert Solution

ANS)Given

capital per worker is k = 50

depreciation rate is d = 0.1

population grows at rate n = 0.02

Investment require to cover up depriciation = dk

= 0.1 x 50

= 5

Investment require to provide capital to new population( worker)= nk

= 0.02 x 50

= 1

so, the  investmen require to make sure future capital per worker stays at the current level = dk +nk

= 5 + 1

= 6

Rahul Sunny answered 2 years ago
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