Tugas Makroekonomi II Kwan Wirawan Kwandou - A011191172

KEMENTERIAN PENDIDIKAN DAN KEBUDAYAAN
UNIVERSITAS HASANUDDIN
FAKULTAS EKONOMI DAN BISNIS
Jln. Perintis Kemerdekaan Km. 10, Tamalanrea, Makassar 90245
Tilp. (0411) 583678, Fax (0411) 587218
Email: feunhas@indosat.net.id
Assignment
(Kwan Wirawan Kwandou – A011191172)
Drs. Muhammad Yusri Zamhuri, MA, PhD
Macroeconomics Theory-II (Undergraduate section)
Instructions: Answer the following questions writing clearly and concisely. Staple all your pages
together and write your name in the upper right corner.
1. Suppose the production function is Cobb-Douglass Y = K0.3 (EL)0.7

a. What fraction of income do capital and labor receive? Show your work.
b. Suppose that immigration raises the labor force by 10%. What happens to total output
(in percent)?, The rental price of capital? And The real wage?.
Answer :
A. What fraction of income do capital and labor receive? Show your work
𝑎 = 0.3 𝑌 = 𝐾 0.3 𝐸𝐿1−𝑎 𝑌 = 𝐾 0.3 𝐸𝐿0.7
Capital Share Of Income : Labor Share Of Income :
𝑌 𝑌
𝑅∗𝐾 𝑎 (𝐾 ) . 𝐾 𝑊 ∗ 𝐿 (1 − 𝑎) ( 𝐿 ) . 𝐿
= =𝑎 = = (1 − 𝑎)
𝑌 𝑌 𝑌 𝑌
Info : Info :
𝐾 = Capital 𝐿 = Labor
𝑅 = Rental Rate 𝑊 =Wage
𝑌 = Production 𝑌 = Production
Tilp. (0411) 583678, Fax (0411) 587218
𝛿𝑌 𝑌 Rental Rate Of Capital = 𝑀𝑃𝐾 =

Real Wage = = 𝑀𝑃𝐿 = (1 − 𝑎) (𝐿 )
𝛿𝐿 𝛿𝑌 𝑌
= 𝑎 (𝐾)
𝛿𝐾
Conclusion, So the Fraction of Income that Capital Receive which was defined by
𝑎, is equal to 0.3. And the Fraction of Income that Labor Receive which was defined
again by 1 − 𝑎 is equal to 0.7
𝑎 = 0.3 1 − 𝑎 = 0.7
B. Suppose that immigration raises the labor force by 10%. What happens to total output
(in percent)?, The rental price of capital? And The real wage?.
Answer ( Kwan Wirawan Kwandou)
Y = K0.3 (EL)0.7 𝑀𝑃𝐾 = 0.3 𝑀𝑃𝐿 = 0.7
𝐿0 = 1
Because the labor was increased by 10%, now we have a new labor value which is :
𝐿1 = 1.1
Total Output
𝑌0 = 𝐾 𝑎 𝐸𝐿1−𝑎
𝑌1 = 𝐾 𝑎 𝐸𝐿11−𝑎
= 𝐾 𝑎 (1.1𝐿0 )(1−𝑎)
= (1.1)(1−𝑎) 𝐾 𝑎 𝐸𝐿1−𝑎
= (1.1)(0.7) 𝐾 𝑎 𝐸𝐿1−𝑎
= (1.069) ∗ 𝑌0
So the conclusion is, Total Output is up by 6.9%
Rental Price Of Capital

Tilp. (0411) 583678, Fax (0411) 587218
𝑌
𝑅0 = 𝑀𝑃𝐾 = 𝑎 ( )
𝐾
𝑌
𝑅1 = 𝑎 ( )
𝐾
1.069 ∗ 𝑌0
𝑅1 = 𝑎 ( )
𝐾
𝑌0
= 1.069 ∗ 𝑎 ( )
𝐾
= 1.069 ∗ 𝑌0
So the conclusion is, Rental Price Of Capital is up by 6.9%
Real Wage
𝑌
𝑊0 = (1 − 𝑎) ( )
𝐿
𝑌1
𝑊1 = (1 − 𝑎) ( )
𝐿1
1.069 ∗ 𝑌0
=1−𝑎 ( )
1.1 𝐿0
1.069 𝑌
=( ) (1 − 𝑎)(𝐿0 )
1.1 0
= 0.97 𝑊0
So the conclusion is, Real Wage is down by 2.9 % (1 − 0.97)
2. Suppose output is produced according to the production function in the country:

Cobb-Douglass Y = K1/3 (EL)2/3
c. Express output per worker (y = Y/L) as a function of capital per worker (k = K/L).
Then compute the steady state capital per worker, k*, and the steady state
consumption per worker, c*. Show the steady state in the Solow diagram.
d. How fast does y (output per worker) grow in the steady state? How fast does Y (Total
Output) grow in the steady state? Explain.
Answer
Tilp. (0411) 583678, Fax (0411) 587218
Y = K1/3 (EL)2/3 𝑌 1 1
= 𝐾 3 𝐸𝐿 −3
𝐿
1 2
𝑌 𝐾 3 𝐸𝐿 3 1
= 𝑌 𝐾3 1
𝐿 𝐿 = ∗
𝐿 1 1
𝐸𝐿 3
𝑌 1 2 1
= 𝐾 3 𝐸𝐿 3 ∗
𝐿 𝐿 1
𝑌 𝐾3
= 1
𝑌 1 2 𝐿
= 𝐾 3 𝐸𝐿 3 ∗ 𝐿−1 𝐸𝐿 3
𝐿
𝟏
𝑌 1 2 𝒀 𝑲 𝟑
= 𝐾 3 𝐸𝐿 3 +(−1) =( )
𝐿 𝑳 𝑬𝑳
∆𝐾 = 1 − 𝛿𝑘 Suppose :
𝒌 = 𝟏𝟎𝟎 ∶ 𝜹 = 𝟎, 𝟏𝟓
∆𝐾 = 𝑆. 𝑓(𝑘) − 𝛿𝑘
𝑳 = 𝟏𝟔 ∶ 𝜹 = 𝟎, 𝟏𝟎
1
∆= 𝑆. 𝐾 3 −𝛿
Steady State
∆𝑘 = 0
1
0 = 𝑆𝑘 3 − 𝛿𝑘
So,
1
𝑆𝑘 3 = 𝛿𝑘
𝑆 𝑘
= 1
𝛿
𝐾3
Tilp. (0411) 583678, Fax (0411) 587218
1 𝑆
𝐾3 =
𝛿
3 3
1 2
𝑆 2
(𝑘 ) =
3 (𝛿 )
3
𝑆 2
𝑘=( )
𝛿
3
0,15 2
𝑘∗ = ( )
0,10
𝒌∗ = 𝟏. 𝟖𝟑𝟖
𝑖 ∗ = 0,10 (1.838) 𝑐∗ = 𝑦 − 𝑖
= 𝟎, 𝟏𝟖𝟑𝟖 = 1.225 − 0.1838
1
= 𝟏. 𝟎𝟒𝟏𝟐
𝑦 ∗ = 𝑘1/3 = (1.838)3
= 𝟏. 𝟐𝟐𝟓
Y
𝑌 ∗ = 1,225
𝑖 ∗ = 1,0412
𝛿𝐾
𝐼 ∗ = 0,1838
K
𝐾 ∗ = 1,838
Tilp. (0411) 583678, Fax (0411) 587218
3. Suppose the production function is

Y = K1/3 (EL)2/3
Where E is the efficiency of labor.
a. Derive the per-efficiency-unit-of-labor production function. (i.e. y = f(k) =Y/EL)
b. Solve for the steady state value of y as a function of s, n, g and δ
c. A less developed country has a saving rate of 10% and a population growth rate of 4%
per year. In both countries, g = 0.02 and δ = 0.04. Find the steady state value of y for
each country.
d. If labor augmenting technological progress grows at 2% per year and both the capital
stock and the number of workers grows at 1% per year, calculate the growth rate of
output.
Answer :
1 2
𝑌 𝐾3 (𝐸𝐿)3
a. 𝑦 = 𝑓(𝑘) = =
𝐸𝐿 𝐸𝐿
1 2
= 𝐾3 (𝐸𝐿)3 . (𝐸𝐿)−1
1 1
= 𝐾 3 (𝐸𝐿)3
1
𝐾3
= 1
(𝐸𝐿)3
1
𝐾 3
=( )
𝐸𝐿
𝒇(𝒌) = 𝟑√𝒚
Tilp. (0411) 583678, Fax (0411) 587218
b. ∆𝑘 = 𝑠𝑓(𝑘) − (𝛿 + 𝑛 + 𝑔)𝑘 = 0
𝑠 3√𝑦 − (𝛿 + 𝑛 + 𝑔) 𝑦 3 = 0
1
𝑠𝑦 3 − (𝛿 + 𝑛 + 𝑔) 𝑦 3 = 0 1
8 ∶ 𝑦3
𝑠 − (𝛿 + 𝑛 + 𝑔) 𝑦3 =0
8
𝑠 = 𝑦3 (𝛿 + 𝑛 + 𝑔)
𝒔
𝒚∗ =
𝜹+𝒏+𝒈
c. Developed Country : Less developed country :
s = 0.28 s = 0.10
n = 0.01 n = 0.04
g = 0.02 g = 0.02
δ = 0.04 δ = 0.04
Developed Country : Less developed country :

𝑠
𝑦 ∗ = 𝛿+𝑛+𝑔 𝑦 ∗ = 𝛿+𝑛+𝑔
𝑠
0.28
𝑦∗ =
0.04 + 0.01 + 0.02
0.10
𝒚∗ = 𝟒 𝑦 ∗ = 0.04+0.04+0.02
𝒚∗ = 𝟏
Tilp. (0411) 583678, Fax (0411) 587218
∆𝑦 ∆𝑘 ∆𝐿 ∆𝐴
d. =𝑎 + (1 − 𝑎) +
∆𝑦 𝑘 𝐿 𝐴
∆𝑦 1 2
= (1%) + (1%) + (2%)
𝑦 3 3
∆𝑦
= 0,01014 → 𝟏, 𝟎𝟏𝟒 %
𝑦
If ∆𝐴 equal to 2%, ∆𝑘 equal to 1%, and ∆𝐿 equal to 2%. Growth rate of output is increase by
1,014%
===Goodluck===

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KEMENTERIAN PENDIDIKAN DAN KEBUDAYAAN

Macroeconomics Theory-II (Undergraduate section)

1. Suppose the production function is Cobb-Douglass Y = K0.3 (EL)0.7

𝑎 = 0.3 𝑌 = 𝐾 0.3 𝐸𝐿1−𝑎 𝑌 = 𝐾 0.3 𝐸𝐿0.7

Capital Share Of Income : Labor Share Of Income :

𝑅 = Rental Rate 𝑊 =Wage

𝛿𝑌 𝑌 Rental Rate Of Capital = 𝑀𝑃𝐾 =

Answer ( Kwan Wirawan Kwandou)

Y = K0.3 (EL)0.7 𝑀𝑃𝐾 = 0.3 𝑀𝑃𝐿 = 0.7

Rental Price Of Capital

So the conclusion is, Real Wage is down by 2.9 % (1 − 0.97)

2. Suppose output is produced according to the production function in the country:

= 𝟎, 𝟏𝟖𝟑𝟖 = 1.225 − 0.1838

3. Suppose the production function is

Developed Country : Less developed country :

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