Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 3, Problem 2QQ
To determine
The share of total income paid to owners of capital.
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Assume that a national restaurant firm called BBQ builds 15 new restaurants at a cost of $1 million per restaurant. It outfits each
restaurant with an additional $200,000 of equipment and furnishings. To help partially defray the cost of this expansion, BBQ issues
and sells 300,000 shares of stock at $30 per share.
Instructions: Round your answers to 1 decimal place.
a. What is the amount of economic investment that has resulted from BBQ's actions?
million
b. How much purely financial investment took place?
million
Suppose that an economy’s production function is Cobb–Douglas with parameter = 0.3
a. What fractions of income do capital and labor receive?
b. Suppose that immigration increases the labor force by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage?
c. Suppose that a gift of capital from abroad raises the capital stock by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage ?
For a nation's real GDP per capita to decrease during a year,
a) investment spending must increase.
b) real GDP must increase more rapidly than population.
C) consumption spending must increase.
c)
O d) population must increase more rapidly than real GDP.
d)
Chapter 3 Solutions
Macroeconomics
Ch. 3 - Prob. 1QQCh. 3 - Prob. 2QQCh. 3 - Prob. 3QQCh. 3 - Prob. 4QQCh. 3 - Prob. 5QQCh. 3 - Prob. 6QQCh. 3 - Prob. 1QRCh. 3 - Prob. 2QRCh. 3 - Prob. 3QRCh. 3 - Prob. 4QR
Ch. 3 - Prob. 5QRCh. 3 - Prob. 6QRCh. 3 - Prob. 7QRCh. 3 - Prob. 8QRCh. 3 - Prob. 1PACh. 3 - Prob. 2PACh. 3 - Prob. 3PACh. 3 - Prob. 4PACh. 3 - Prob. 5PACh. 3 - Prob. 6PACh. 3 - Prob. 7PACh. 3 - Prob. 8PACh. 3 - Prob. 9PACh. 3 - Prob. 10PACh. 3 - Prob. 11PACh. 3 - Prob. 12PACh. 3 - Prob. 13PACh. 3 - Prob. 14PA
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- Ecuador's economy has a production function that is as follows: Y = K2/5L3/5 The men in Ecuador generally stay home performing household chores while women work. Since the Ecuadorian state television stopped airing soap operas, many men decided to join the workforce and thus the labor force increased by 6.5%. However, recent storms have destroyed much of the capital stock of the country and thus the capital stock shrank by 2.5%. A. Assuming there is no change in total factor productivity in Ecuador, how would the output of Ecuador's economy change? B. How would labor productivity (output per worker) be affected by the increase in labor and decrease in capital stock? Explain. C. Assuming instead that Ecuador's economy grew by 4.9%, what would be the change in total factor productivity in the economy?arrow_forward1. Assume individual's utility flow function takes form: u(c) = log(c), and the production function takes form: Y(t) = AK(t) + BL(t). Describe the physical capital accumnlation equation and obtain the GDP growth rate in the following economy: (a) RCK economy (b) OLG economyarrow_forwardFigure 2.12 b. y (Figure 2.12) Suppose the y axis of this graph represents consumer goods and the x axis represents capital goods. If the economy is currently operating at point b and it wants to accelerate its future growth ceteris paribus, the opportunity cost would be: reduced capital investment. increased capital investment. reduced consumer goods. no change in consumption. increased consumption.arrow_forward
- Question 1. k] Assume a Cobb-Douglas production function, where the share of capital is 0.3. If capital grows by 1%, labour grows by 2% and growth of total factor productivity is 1.3%, by how much does total output grow? A. 4.30%. B. 3.00 %. C. 2.60 %. D. 1.16 %. E. There is not enough information to calculate it. Question 2. [ in per capita terms can be written as y = k. If the savings rate is s = 0.25, the rate of growth Assume an endogenous growth model with a production function that of population is n = 0.05 and the rate of depreciation is d = 0.10, how high is the rate of growth of output per capita? A. 20% B. 15% C. 10% D. 0% E. There is not enough information to calculate it.arrow_forwardA society will put more investment on consumer goods than capital goods if it values more of present happiness than future happiness. True Falsearrow_forward6. Consider a hypothetical economy that has the production function Y = = F (K, LE) = K¹/3 (LE) 2/3, where Y is output, K is capital, and LE is the number of effective workers. Suppose the saving rate is 20%, the capital depreciates by 3%, the population grows at the rate of 1%, and the rate of labor-augmenting technological change is 1%. a. Solve for the per-effective-worker production function.arrow_forward
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