In class there was an argument that if people could accumulatehuman as well as physical Capital, the production function wouldlook like the "AK" production function.

(B) What would be the macroeconomic consequences of increasing thesavings rate in the economy?

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Yusra AneesLv10

28 Sep 2019

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Related questions

a) Is it true that if people could accumulate human as well as physical capital, the production function would look like the "AK" production function?
b) What would be the consequences of a decrease in fertility in this economy?

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4. Suppose an economy can produce physical capital goods and consumption goods. Currently, the economy is employing all of its resources to produce a combination of physical capital goods and consumption goods. a. Explain what is the economyâs opportunity cost of increasing its production of physical capital goods. b. Explain what is the economyâs long run benefit from increasing its production of physical capital goods. c. Explain how increasing the production of physical capital goods today would impact the economyâs production possibilities curve in the future.

Assume that a country's production function is Y = AK^(1/2)L^(1/2)

a. What is the per-worker production function y = f(k) if A = 1?
b. Assume that the country possesses 40,000 units of capital and 10,000 units of labor.
What is Y? What is labor productivity computed from the per-worker production
function? Is this value the same as labor productivity computed from the original
production function?
c. Assume that 10 percent of capital depreciates each year. What gross saving rate is
necessary to make the given capital