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Using data from the St. Louis Federal Reserve (FRED) (http://research.stlouisfed.org/fred2/), analyze savings and investment. a. Find the most recent value and the value from the same quarter four years earlier from FRED for Gross Government Saving (GGSAVE). b. Total gross saving in the economy is composed of gross private saving and gross government saving. What […]

Using data from the St. Louis Federal Reserve (FRED) (http://research.stlouisfed.org/fred2/), analyze savings and investment. a. Find the most recent values and the values from the same quarter three years earlier from FRED for Gross Private Saving (GPSAVE) and Gross Government Saving (GGSAVE). b. Using the values found above, compute the total gross saving in the

What are the distinguishing characteristics of a Cobb–Douglass production function? With the Cobb-Douglas production function, Y = AK1/4L3/4 , if both capital and labor increase by 30%, what will happen to real GDP?

Suppose that the production function for the economy is: Y = AK1>2L1>2. Assume that real GDP is $12,000 billion, the capital stock is $40,000 billion, and the labor supply is 150 million (or 0.150 billion) workers. a. Calculate the value of the marginal product of capital. Given this value, if the capital stock increases by $1 billion, by

Draw a graph of the aggregate production function with capital, K, on the horizontal axis. a. Why does the graph have the shape that you have drawn? b. Indicate on the graph the effect of an increase in the capital stock. c. Indicate on the graph the effect of an increase in the productivity of labor.

Briefly explain whether the following Cobb-Douglas production function exhibits constant returns to scale: Y = AK1/2L3/4. What determines the shares of labor and capital in total income? How are these shares related to the production function?

Assume that the labor force is 140 million workers, the capital stock is $50,000 billion, and real GDP is $6,500 billion to answer the following questions: a. If the production function is Y = AK1>2L1>2, what is total factor productivity? b. If the production function is Y = AK1>4L3>4, what is total factor productivity?

Suppose that the production function is given by Y = AK1>5L4>5. a. If A = 2,000, K = $10,000 billion, and L = 50 million workers, what is real GDP? b. Find the real wage. c. Find the real rental cost of capital. d. Graph the relationship between the production function and the labor and capital markets.

Suppose that the production function is Y = AK1>4L3>4. Assume that A = 1,000, the current level of the capital stock is $16,000 billion, and the labor force is 200 million workers. a. Find the marginal product of labor. b. Graph the marginal product of labor. c. Graph the production function, putting labor on the horizontal axis and assuming

Consider the economy described in problem 2.7. Briefly explain the likely changes in real GDP, the real wage, and the real rental cost of capital under each of the following scenarios. Include a graph with your answers: a. There are breakthroughs in technology that improve the productivity of all factors of production, causing A to increase to