ECON302 Study Guide - Final Guide: Lump Sum, Tax Rate, Diminishing Returns
Document Summary
Labor augmenting or harrod neutral technology y = f(k,al: factor augmenting or hicks neutral technology y = af(k,l, capital augmenting or solow neutral technology y = f(ak,l) Properties of neoclassical pf: positive and diminishing marginal returns of capital and labor, constant returns to scale (homogeneity on degree 1 in k and l) Inada conditions as mpc approaches infinity mpl approaches 0 and vice versa. Labor force growth rate = population growth rate if lfpr is constant. Long run growth rate of capital per worker is sa s(dep. ) Ak model: no steady state, no convergence between rich and poor models. Economies of scale in cash management at higher incomes households hold less money in proportion to their income. For a given p money demanded increases when income increases but decreases with interest rate. In the lr, increase or decrease in nominal quantity of money supplied influences nominal variables but not real ones.
