Analysis Assignment 5

Korea. Over the last 60 years or so, Korea has been one of the most successful economies in the world. What are the sources of this success? Consider the following data: GDP per capita is expressed in 2017 US dollars. Population and employment are in millions of heads. Capital is in thousands of dollars. Education is a human capital index based on the average years of schooling. (a) Compute the (average continuously compounded) growth rate of GDP per worker. (b) Use our growth accounting methodology to allocate growth in output per worker to TFP, capital per worker, and human capital. What factors are most important? (c) What is the growth rate of GDP per capita? How does it differ from growth in output per worker? Why?

5. Suppose that the economy's production function is Y = √KVLA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 2.4%, the rate of depreciation of capital (6) is equal to 3%, the number of workers grow at 0.7% per year and the rate of technological progress is 3%. (a) Find the steady state values of: iv. v. growth rate of output growth rate of output per worker (b) Suppose that the growth rate of workers decreases. What is its short-run and the long-run effect on the growth rate of output per worker ?

7. Suppose that the economy's production function is Y = √K√LA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 6%, the rate of depreciation of capital (8) is equal to 5%, the number of workers grow at 5% per year and the rate of technological progress is 4%. (a) Find the steady state values of: iv. growth rate of output per worker growth rate of output v. (b) Suppose that the saving rate increases. What is its short-run and the long-run effect on the growth rate of per-capita output?

The economy has grown by 4% per year over the past 30 years. During the same period, the labor force has grown by 1% per year and the quantity of physical capital has grown by 5% per year. Each 1% increase in physical capital per worker is estimated to increase productivity by 0.4%. Assume that human capital has not changed during the past 30 years. What is the growth rate of productivity? A) 5% B) 4% C) 3% D) 1.6%

5. Suppose that the economy's production function is Y = √K√LA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 2.4%, the rate of depreciation of capital (8) is equal to 3%, the number of workers grow at 0.7% per year and the rate of technological progress is 3%. (a) Find the steady state values of: i. 11. capital stock per effective worker output per effective worker growth rate of output per effective worker

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Q)Consider three economies,each of which has GDP per capita of $100. Trend growth in these economies is 2%, 2.5% and 5% respectively. Calculate GDP per capita for each economy after 5, 10, 20, 50 and 100 years.

Assuming a country’s economy maintains an 8% rate of growth, young adults starting at age 20 would see the average standard of living in their country more than double by the time they had reached age __________. Question options: a) 30 b) 60 c) 50 d) 40 Country Alpha and Country Beta initially have the same real GDP per capita. Country Alpha experiences no economic growth, while CountryBeta grows at a sustained rate of 5 percent. In 14 years, Country Alpha’s GDP will be approximately _________ that of Country Beta. Question options: a) triple b) double c) one-half d) one-fourth

1. Consider the following Romer model of economic growth: Y₁ = A₁Lyt AA, = ZA,L, Lat = Lyt= = L Lat = lL (a) If 4₁ = 100, ē = 0.1,ī = 1/3,000, [= 1,000, and what is the growth rate of knowledge in this economy? (b) What is the growth rate of per capita output in this economy? (c) Using the information from year 1, what is the level of per capita output in this economy in year 5?

11) The relationship between the growth rate of an economic variable, gt, and its level, yt, can be approximated by A) gt = yt - yt - 1. B) gt = logt - log yt - 1.  C) yt = log gt - log gt - 1. D) log gt = yt - yt - 1. 12) The business cycle component of the log of real per-capita GNP is equal to A) log of actual real GNP - log of trend GNP. B) log of trend GNP ÷ log of actual real GNP. C) log of trend GNP - log of actual real GNP. D) log of actual real GNP ÷ log of trend GNP. 13) For the study of economic growth, it is most helpful to examine movements in ________; for the study of business cycles, it is most helpful to examine movements in ________. A) trend GNP; trend GNP B) trend GNP; deviations from trend in GNP C) deviations from trend in GNP; trend GNP D) deviations from trend in GNP; deviations from trend in GNP 14) Over the twentieth century, growth in per-capita GNP was highest A) immediately prior to the Great…

Q)1 a) Canada​'s real GDP was 2,016 billion dollars in 2017 and 2,053 billion dollars in 2018. Canada​'s population growth rate in 2018 was 0.8 percent. Calculate Canada​'s economic growth rate and growth rate of real GDP per person in 2018. b) Calculate the approximate number of years it will take for real GDP per person to double if an economy maintains an economic growth rate of 12 percent a year and a population growth rate of 7 percent a year.

5) Suppose that an economy starts off with a per capita real GDP of $5,000. How large will the per capita GDP of this country be if it grows at an annual rate of 6% for 40 years? Use compound growth rate formula. Show your calculations and the unit of account of your answer. Answer: 6) The graph below represents per-worker production functions for the same country. Answer the following questions using this graph. Real GDP per hour worked, Y/L $17,000 16,400 16,000 15,000 Production function3 B Production function2 E Production function1 a) Answer: $50,000 60,000 70,000 Capital per hour worked, K/L Which concept is illustrated by the movement from point A to B or from point B to C?

Only answer the 2nd MCQ question of the growth rate of output per capita

3. Use the following information to answer the questions below: (1) the rate of depreciation is 10% per year, (2) the population growth rate is 2% per year, and (3) the growth rate of technology is 3% per year. (a) The annual growth rate of "effective labor" in the steady state equals_ (b) The level of investment needed to maintain a constant capital stock ( K ) in this economy is xK. (c) The level of investment needed to maintain constant capital per effective worker (K/(AN)) is _x K. (d) The steady state growth rate of aggregate output in this economy is %. (e) The steady-state growth rate of output per worker in this economy is

“Since 1980, aggregate per capita GDP in sub-Saharan Africa has declined at almost 1 percent per annum. The decline has been widespread: 32 countries are poorer now than in 1980. Today, sub-Saharan Africa is the lowest-income region in the world...It is clear that Africa has suffered a chronic failure of economic growth. The problem for analysis is to determine the causes” (Collier and Gunning 1999: ‘Why has Africa grown slowly?’).   Explain the possible reasons why sub-Saharan Africa grew so slowly from 1980- 1999?

Question 9 Which of the following statements is true? 1. If output per head is proportional to the number of ideas had in the past, then a constant rate of growth requires ever rising numbers of new ideas each year. 2. World population growth is a potential source of new ideas. a) Both 1 and 2 b) 1 only c) 2 only d) Neither 1 nor 2

7. Numbers in the Romer model (II): Now suppose the parameters of the model take the following values: A = 100,7 = 0.06, z=1/3000, and L = 1000. (a) What is the growth rate of output per person in this economy? (b) What is the initial level of output per person? What is the level output per person after 100 years? (c) Now consider the following changes one at a time: a doubling of the initial stock of knowledge Ao, a doubling of the research share I, a doubling of research productivity Z, and a doubling of the population L. How would your answer to parts (a) and (b) change in each case? (d) If you could advocate one of the changes considered in part (c), which would you choose? Write a paragraph arguing for your choice.

What is the potential impact of rapid economic growth on: a) A nation's tax base? b) GDP/Capita? Brief explanation for each. 2. If the annual rate of GDP growth is 3%, use the rule of 72 to calculate the number of years it would take for the GDP to double. Show all calculations. I (Ctrl)-

(a) Differentiate between the economic concepts of short-run and long-run economic growth and analyse the main causes of economic growth in a country. (b) GDP per capita is often considered to be the most important indicator of living standards, but critics often claim that it does not measure of all the elements that contributes to a person’s happiness. Discuss the extent to which you agree that GDP per capita is the most effective measure of living standards of a country.

3. (This is problem 5, page 239 of the textbook.) Two countries are identical in every way except that one has a much higher capital-labor ratio than the other. According to the Solow model, which country's total output will grow more quickly? Does your answer depend on whether one country or the other is in a steady state? In general terms, how will your answer be affected if the two countries are allowed to trade with each other?

GDP per capita in the United States was approximately $63,000 in 2020. Use the growth formula (see below) to answer the following questions:  Growth formula: (future value) = (present value) × (1 + r)t present value = this year's GDP per capita future value = GDP per capita in the future r = rate of growth (in decimal form) per year What will GDP per capita be in the year 2025 if it grows each year by 2.5 percent?