Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.
Consider a closed economy with the following set of characteristics:
Consumption function is Cd =100 + 0.95Y – 200r, where Y is real output and r is real interest rate
Government purchases G=200
Labor supply line is vertical (perfectly inelastic), and given by the equation N=100.
The production function is given by Y = 40K – 0.01K2 + 4N – 0.01N2 . Marginal product of labor, MPN = 4 – 0.02N; Future marginal product of capital is MPKf = 40 – .02Kf , where Kf is future capital stock.
The depreciation rate of capital d=20% per period, while revenue taxes that firms have to pay are equal to 50% of revenues; Suppose that the current capital stock K is 900 units.
The economy is closed, and so both NX as well as NFP equal 0. The price of a unit of capital is pK =1 unit of output.
a. What is the level of current output Y in this economy?
b. Drive the equation describing the demand for investment Id as a function of real interest rate, r.
c. Derive the equation describing the level of savings in the current period as a function of Y and r
d. Use the equilibrium in the market loanable funds (Sd = Id ) to derive the equilibrium real interest rate r, level of investment demand Id and savings Sd . Use the level of current output to perform the calculations.
e. Compute the level of future capital, Kf and consumption, Cd .
f. Verify that all output is sold in this economy.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more