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QUESTION
An economy's production function is Y = AK^(1/3) L^(2/3). Also, A = 10, K = 216, and L =1000. Furthermore, G =1100, T=1000, and C=250 + (3/4)(Y-T),...
An economy's production function is Y = AK^(1/3) L^(2/3). Also, A = 10, K = 216, andÂ
L =1000. Furthermore, G =1100, T=1000, and C=250 + (3/4)(Y-T), and I=5000-50000r.
a. Calculate the value of Y and, calculate the value of MPK AND MPL.
b. Calculate the total real wages paid to labor and the total real return paid to capital owners.
c. Find the equilibrium value of the interest rate, r.
d. Calculate private saving and public saving.
