Imagine an Economy with Production Function Y = F(K) = $\sqrt { K }$

question 111

Multiple Choice

Imagine an economy with production function Y = F(K) = $\sqrt { K }$ and 400 units of capital. If the fraction of output invested in new capital is $\gamma$ = 0.2 and the depreciation rate is $\delta$ = .05, how much total capital will be available in the next period?

• A) 380 units
• B) 384 units
• C) 400 units
• D) 404 units

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Definitions:

Renaissance

French, “rebirth.” The term used to describe the history, culture, and art of 14th- through 16th-century western Europe during which artists consciously revived the classical style.

Medici Family

A wealthy and powerful Italian family who were significant patrons of the arts and instrumental in the Renaissance's development.

Humanism

In the Renaissance, an emphasis on education and on expanding knowledge (especially of classical antiquity), the exploration of individual potential and a desire to excel, and a commitment to civic responsibility and moral duty.

Palazzo Medici-Riccardi

A Renaissance palace in Florence, Italy, which served as the main residence of the Medici family, showcasing the wealth and power of this influential family.