In Kaldor's model, sc = 40%, sw = 8%, n = 2% while v = 5. What will be the share of capital?
Understand the Problem
The question is asking to calculate the share of capital based on the provided parameters in Kaldor's model, which includes the share of capital (sc), share of wages (sw), growth rate (n), and the value (v). To find the capital share, we would use the formula that defines these relationships within Kaldor's model.
Answer
The share of capital can be calculated using the formula $s_c = \frac{v \cdot n}{v \cdot n + w}$ and inserting the relevant values.
Answer for screen readers
The final answer, based on the specific values provided for $s_w$, $n$, and $v$, will give the share of capital $s_c$.
Steps to Solve
- Identify the formula for capital share
In Kaldor's model, the share of capital ($s_c$) can be expressed in terms of growth rate and other parameters. The formula typically used is: $$ s_c = \frac{v \cdot n}{v \cdot n + w} $$ where $v$ represents the value and $w$ represents share of wages.
- Substitute the known values
Insert the values for share of wages ($s_w$), growth rate ($n$), and value ($v$) into the formula. Ensure the values are in the correct units and clarify if any additional information is needed.
- Simplify the equation
After substituting, simplify the equation step by step to resolve for $s_c$. This can involve combining like terms and reducing fractions if applicable.
- Calculate the final share of capital
Use a calculator to compute the exact value of $s_c$ based on the simplified equation. Ensure to double-check calculations for accuracy.
The final answer, based on the specific values provided for $s_w$, $n$, and $v$, will give the share of capital $s_c$.
More Information
Kaldor's model helps in understanding the relationships between capital and income distribution over time. The share of capital can fluctuate based on economic growth rates and shifts in wage contributions, emphasizing the dynamic nature of economic models.
Tips
- Confusing the parameters: It's crucial to ensure that $v$, $n$, and $w$ are properly identified and represented.
- Incorrect calculations: Always double-check arithmetic and algebraic simplifications to reduce errors during calculation.
