Cheatography

# Econ Exam 2 Cheat Sheet (DRAFT) by Valucas14

This is a draft cheat sheet. It is a work in progress and is not finished yet.

### Basic Cobb-D­ouglas Production Function

 Key Properties Marginal Product of Capital Marginal Product of Labor -Constant Returns to Scale MPK=Pa­rtial derivate of F(K,N) MPN=Pa­rtial derivate of F(K,N) -If inputs are 0 outputs will be 0 MPK= Aα(K/N­)^α-1 MPK= A(1-α)­(K/N)^α -The production function is increa­seing in each of the inputs α(Y/K) > 0 (1-α)(Y/K) > 0 -The production function exhibits dimini­shing returns .

### Neg Impact of Aging LAbor Force

 -Rapid retirement decreases the firms overall knowledge, decreasing produc­tivity. -Produ­ctivity peaks at age 50

### Growth Rate of GDP

 Y= (Y/N) * N then take logs lnY = ln[Y/N] +lnN Differ­entiate for time Y◦/Y = (Y◦/N)­/(Y/N) +N◦/N
Growth rate of GDP equals the growth rate of labor produc­tivity and the growth rate of labor stock

### Solow Growth Model Basics

 Aggregate Production Function Y=AKαN1-α Per Worker Production Function y= Akα Capital Stock Accumu­lation K◦= I-δK Capital Per Worker Accumu­lation k◦ =sf(k)­-(n+δ)k Steady­-State Equili­brium k◦= 0 -> sf(k)=(n+δ)k