Macroeconomic Theory Problems Stated On The Attached Sample - 550 Words

Macroeconomic Theory Problems As Stated On The Attached Sample (Coursework Sample) Content: Title: MACROECONOMIC THEORIESName:University:MACROECONOMIC THEORIESRead pp. 211-213 (8th Edition) or pp. 217-219 (9th Edition) and answer the following questions.1. Suppose production function is given byY= Ã‚ 1/3 Ã‚ 2/3 * Derive the per-worker production function. (Show mathematical steps, in detail to receive full credits)Per-worker production function is derived by dividing both sides of the production function by the labor force, L.In this function,Y=K1/3L2/3,The per-worker production function therefore becomes,Y/L = K1/3L2/3 / LWhen rearranged,Y/L = (K/L)1/3Since = Y/L and k = K/L = k1/3 = 3kb. Suppose 40% of output is saved, and 10% of the capital stock depreciates every year. And the economy starts off with 27 units of capital per worker. Given these numbers, calculate the followings in year 1-year 500, and construct a table like table 8-2 in p.213 of your textbook. (p.219 of the ninth edition). Attached the excel file.-   (capital per worker)- y (output per worker)- c (consumption)- i (investment)- k (capital depreciation)- k (change in capital)Summary40% is saved (s=0.4)Depreciation per year = 10% ( = 0.1)27 units of Capital-per worker = (k = 27)Since = 3k = 32727 units of capital per-worker produce 3 units of output per-worker.Output per worker, y= 3 unitsSince 40% is saved and 60% is consumed,I = 1.2 and c = 1.8Investment, I = 1.2Consumption, c= 1.810% of the capital stock depreciates, 1 x 27 units = 2.7( k = 2.7)Capital depreciation = 2.7Change in capital stock, k = I - k= 1.2-2.7k = -1.5Change in capital = -1.5The economy begins its second year with (2.7+(-1.5)= 1.2 units of capital per worker. * Consider year 45. Should new capital be added or not? Justify your answer using specific numbers and equation k=sf(k)kAt year 45, there is 0.25298 unit capital per-worker, the output per worker is 0.63246, the consumption is 0.37947 and the investment is 0.25298 while capital depreciation is 0.0253 and finally the change in capital is -0.2277. These factors remain constant till the 500th year.The economy has therefore stabilized in such a way that adding or reducing the new capital will of less or no substantial effect on the following years. The change in capital, k=sf(k)k , is therefore constant.d. Calculate the steady-state level of capital, and interpret the result. Show mathematical steps in detail to receive full credits. (Refer t...