How Would Each of the Following Changes Affect the Steady-State

question 83

Essay

How would each of the following changes affect the steady-state values of the capital-labor ratio,output per worker,and consumption per worker?
(a)A change in the composition of the capital stock raises the depreciation rate.
(b)A change in social mores lowers the population growth rate.
(c)Government tax policies change to encourage a higher saving rate.
(d)A supply shock reduces productivity sharply.

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Definitions:

Perpetual Inventory System

This technique documents transactions of inventory sales or purchases in real-time, utilizing computer-based point-of-sale systems and software designed for managing company assets.

Physical Inventory

The process of counting the actual items of inventory in stock to verify records and accounts.

Single-Step Income Statement

A form of income statement in which the total of all expenses is deducted from the total of all revenues.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overhead, payroll, taxes, and interest.