Given the production function Y = zK 0.75 N 0.25 , where z = 4, n =0.05, and d =

ID: 1189317 • Letter: G

Question

Given the production function Y = zK0.75N0.25, where z = 4, n =0.05, and d = 0.10, what is the Golden Rule of Accumulation capital per worker?

Given the information in question (1), what is the Golden Rule of Capital Accumulation output per worker?

Given the information in equation (1), what is the Golden Rule of Capital Accumulation consumption per worker?

Given the information in equation (1), what is the Golden Rule of Capital Accumulation savings rate?

PLEASE EXPLAIN HOW YOU DERIVED THE EQUATIONS AND ALL STEPS

Golden rule of accumulation: MPK = n+d

per capita income = y = zk0.75

k=per capita capital

Golden rule k = 3k-0.25=0.15

k=(1/0.05)4

=160000

y = 4(160000)0.75

4(8000) = 32000

c = y - (n+d)k

= 3200 - (0.15)160000

=32000 - 24000 = 8000

savings rate = s(32000) = 0.15(160000)

s = 0.75

75% saving rate

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