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Reinterpret the endogenous growth model in this chapter as follows. Determine how this model can explain this observation, and discuss.
What are the effects of an increase in current income on consumption in each period, and on savings?
Determine the consumer's lifetime wealth. Determine optimal consumption in the current and future periods and optimal saving, and show this in a diagram.
how much he or she can borrow, much like the credit limit typically placed on a credit card account. That is, the consumer cannot borrow more than x.
Use a diagram to determine which option the consumer chooses, and explain your results.
Calculate the effects on current and future consumption and optimal saving, and show this in your diagram.
Determine each consumer's current consumption and current saving. Determine aggregate private saving, aggregate consumption in each period.
Write down the lifetime budget constraint of the consumer. Show that lifetime wealth is the same for the consumer, before and after the change in tax rates.
Plot the 12-month percentage growth rates in real GDP and in total real government purchase from 1948 to 2012. Calculate these growth rates from quarterly data.
Using the one-period model, show what effects additional education has in the present on consumption, leisure, employment, aggregate output, and the real wage.
Explain why economies experience recessions (periods when output is low)? Explain why or why not, with reference to the key business cycle facts.
Determine the effects on aggregate output, consumption, employment, and real wage, with reference to income and substitution effects, and explain your results.
Discuss the forces that cause people to prefer life in the city. How do these forces relate to whether or not market outcomes are economically efficient?
What happens to public goods provision and private consumption when GDP increases, and when the opportunity cost of public goods provision becomes larger?
Given this production function, what will be the representative firm's demand for labor? What problems do you see this presenting?
Determine the effect of the pollution regulation on the firm's profit-maximizing choice of labor input, and on the firm's labor demand curve.
Determine the effects of an increase in the real wage on the firm's choice of labor input. Construct the firm's demand curve for labor.
If the wage rate increases, how does this affect the consumer's hours of work? Explain the implications of this for unemployment insurance programs.
Suppose that the government imposes a producer tax. Determine the effect of this tax on the firm's demand for labor.
Suppose that the government subsidizes employment. Determine the effect of the subsidy on the firm's demand for labor.
If z = 1 and K = 1, graph the production function. Is the marginal product of labor positive and diminishing?
The employment-population ratio, from the Current Population Survey, is a measure. Plot the employment-population ratio for the years 1980-2012.
Comment on what you observe in the time series, and how this relates to our model and how we want to interpret it.
What do you notice about how this time series behaves around recession dates (the shaded areas)?
What is the role of the government in the one-period, closed-economy model? Can the government run a deficit in the one-period model? Why or why not?