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Suppose that y = Ak1>4, the capital-labor ratio is $20,000 per worker, the level of total factor productivity is 500, 60% of the population works, and there are 60 million workers. What are real GDP per worker and real GDP per capita?

What is the per worker production function? What is the equation for the per worker production function? Which two factors determine labor productivity? Which of the two is more important? Briefly explain.

Assume that the capital–labor ratio is constant. a. Use the per worker production function to show the effect of an increase in total factor productivity. What happens to the marginal product of labor? Briefly explain. b. What happens to real GDP per capita? c. What happens to the marginal product of capital?

Assume that total factor productivity is constant. a. Use the per worker production function to show the effect of a decrease in the capital– labor ratio. What happens to the marginal product of labor? Briefly explain. b. What happens to real GDP per capita? c. What happens to the marginal product of capital?

Capital’s share of total income is about 10% in both Colombia and Costa Rica. The capital–labor ratio is $15.25 thousand per worker in Colombia and $23.12 thousand per worker in Costa Rica. Real GDP per worker is $12.18 thousand in Colombia and $13.31 thousand in Costa Rica. Predict what will happen to the capital stocks

How do increases in total factor productivity increase the standard of living? What factors cause total factor productivity to change? What is human capital? How does the acquisition of human capital improve the quality of labor? What are the two basic ways in which workers can acquire human capital?

What does it mean to say that an economy is “accumulating capital”? Why does the marginal product of capital decrease as capital is accumulated? What is the difference between a stock variable and a flow variable?

What is depreciation? Explain what happens to the depreciation line when the rate of depreciation increases and when it decreases. Use a graph to show the effect of an increase in the depreciation rate on the steady-state level of the capital–labor ratio and level of real GDP per worker.

An article in the Economist argues, “As China’scapital accumulates, its population ages and its villages empty, saving will grow less abundant and good investment opportunities will become scarcer.” a. Why might an aging population lead to a lower saving rate? Why might China’s saving rate fall as it accumulates more capital? b. Discuss the likely

Suppose that the production function for aneconomy is given by y = k1>4. The depreciation rate is 10%, and the saving rate is 20%. a. Find the steady-state capital–labor ratio for this economy. b. Find the steady-state real GDP per worker for this economy. c. Find the steady-state levels of investment per worker and consumption