In an economy with no technology growth if the depreciation

In an economy with no technology growth, if the depreciation rate increases this will decrease the growth rate of output per worker both in the short runand in the long run increase the growth rate of output per worker in the short run but not in the long run decrease the growth rate of output per worker in the short run but not in the long run increase the growth rate of output per worker both in the short run and in the long run QUESTION 3 In an economy with a population of 300 million, there are 50 million retirees, 50 million children aged less than 16 years, 185 million working at a paid job and 15 million people actively seeking a job but not currently working. O The labor force participation rate is 75% The labor force participation rate is 66.6% The unemployment rate is 7.5% The unemployment rate is 6%

Solution

When the depreciation rate increases reduce the economy\'s growth in the short run. Capital per worker and output per worker will be decreased. Since consumption is a constant fraction of output, its growth rate reduces as well. So, Increase of the depreciation rate reduces the long-run growth rate of capital stock, output, consumption per worker. The first option is correct.

3) Labor force= number of employed+ number of unemployed

=185+15=200 million

Labor force participation rate=Labor force*100/ Number of people who are able to work=200/(300-50-50)=100%

Unemployment rate=number of unemployed*100/ Labor force=15*100/200=7.5%

The third option is correct.