Homework answers / question archive / Question 1 0 / 6 pts Consider an economy with the production function Y=AL1/2K1/2 where Y is output, K is capital, L is labor and A is "ideas

Question 1 0 / 6 pts Consider an economy with the production function Y=AL1/2K1/2 where Y is output, K is capital, L is labor and A is "ideas

Economics

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Question 1

0 / 6 pts

Consider an economy with the production function Y=AL^1/2K^1/2 where Y is output, K is capital, L is labor and A is "ideas."  Find the stead-state levels of capital, output and consumption if L=9, A=20, the savings rate is 1/5 and the depreciation rate is 1/2.  ALL ANSWERS ARE INTEGERS.

K*= 

Y*= 

C*= 

Question 2

2 / 2 pts

Consider an economy that produces the following goods.

Fish quantity:   530

Fish price: 20

Coconut quantity: 539

Coconut price: 7

What is nominal GDP? (Round to the nearest whole number.)

Question 3

0 / 2 pts

If NGDP is 5,941 and the GDP deflator is 160, what is real GDP? (Round to nearest whole number.  Also, you should try to minimize rounding in any intermediary calculations.  Your answer must be within 1%.)

Question 4

2 / 4 pts

For each of the following put a check if it is counted in GDP for the United States in 2015. (And no check if it is not.)  Assume that all of these transactions take place in the United States.

  

A used 2010 Honda Civic sold on Craigslist.

   

An iphone imported from China

 Correct Answer  

An apple grown in beautiful Wenatchee (in the U.S.)

 Correct!  

The service provided by the salesman at the Apple Store where the Chinese-made iphone is sold

Question 5

2 / 2 pts

If NGDP is 1,013 in 2010 and 1,162 in 2011, what is the growth rate of NGDP? (NOTE: ANSWER AS A DECIMAL NOT A PERCENTAGE! SO IF THE RATE IS 12.4% ANSWER "0.124" ROUND TO THREE DECIMAL PLACES.)

Question 6

2 / 6 pts

Anne and Nancy are stranded on a deserted island where they survive by catching birds and picking mangoes.  Anne can catch 10 birds in a day or pick 20 mangoes.  Nancy can catch 9 birds or pick 6 mangoes. 

Who has a comparative advantage in birds?  (Enter "Anne" or "Nancy.")

Who has a comparative advantage in mangoes.  (Enter "Anne" or "Nancy.")

If they want to get 6 birds in a day between the two of them, what is the MAXIMUM number of mangoes they can get?

Question 7

0 / 4 pts

Let the following schedule represent the production function for a firm where I is investment and Y is future output. (I'm scared this won't  line up properly.  If that happens, just associate the first I value with the first  Y value and the last with the last etc.)

I               1               2                 3                 4                 5                 6                7                  8                9

Y             4               6                 7.7            9.2             10.5          11.7         12.85        13.95       15

How much will this firm invest if the real interest rate is 10%? 

How much will they invest if the real interest rate is 20%?

Question 8

2.5 / 3 pts

Say whether each is a factor of production, an institution or neither.

Correct!

Physical capital

 

               factor of production             

Correct!

Property rights

 

               institution             

Correct!

Human capital

 

               factor of production             

Correct!

Recession

 

               neither             

Correct!

Competitive and open markets

 

               institution             

Question 9

6 / 6 pts

 

 

Correct!

The division of labour is limited by the extent of the ________________

 

               market             

Correct!

Production functions have ________________marginal product.

 

               diminishing             

Correct!

Production possibility functions have ______________________ marginal cost.

 

               increasing             

Correct!

Y=consumption + ________________+ government purchases + net exports

 

               investment             

Correct!

Y=employee compensation + rent + interest + __________________

 

               profit             

Correct!

The price of loanable funds is the _________________.

 

               interest rate             

Other Incorrect Match Options:

• technology
• GDP
• capital
• institutions

Question 10

0 / 2 pts

"Catching up growth" is the same as "cutting edge growth."

True False

Question 11

0 / 2 pts

What is the price of a risk-free, one year bond with a face value of 125 if the nominal interest rate is 8%?  (Round to two decimal places.  Do NOT add a dollar sign.)

Question 12

2 / 2 pts

A risky bond will have a ___________________ rate of return than a safer one.

Complete the following on a sheet of paper and upload a picture in the assignment named "Midterm Upload." (Try to get them both in one paper/picture.)

a. Show the market for loanable funds and show what will happen if people become more patient.

b. Show the effect of this increase in patience on the steady-state levels of capital and output.