Question

A Romer economy starts off with an initial stock of ideas equal to 100. The total population in the economy is 60, two of the workers are employed in the research sector, and the productivity parameter of the research sector is equal to 0.01. Calculate the stock of ideas in period 10. Round your answer to the nearest tenth.

Answer 1

The stock of ideas in period 10 is 122.

Explanation:

• A stock thought is the underlying driving force to examine a potential value venture. A stock thought is the initial phase in a procedure of screening, research, and judgment that eventually prompts a choice to put or not put resources into a given stock.  

• The Stock of ideas in period t is equivalent to and is the efficiency parameter of the examination division (0.01), is the part of the populace that works in look into () and is the all out populace in the economy.

      Stock of ideas = initial stock idea(1 + productivity parameter  2)^10  

                               = 100(1 + 0.01 x 2)^10  

      Stock of ideas = 122.