14. Consider a nation in which the volume of goods and services is growing by 5 percent per year. Whatis the effect of this 5 percent growth on the nation's living standards? Will these also necessarily growby 5 percent per year, given population growth? Why or why not?If a country's living standards are increasing at 5%, this implies that output is (increasing, decreasing) at a rate of 5% above population growth. Modern economic growth means that output per(p ) increases. That is, the rate of output growth exceeds the rate of population growth. If thisrate of growth is „greater., smaller ) than the rate of population growth, the standards of living willimprove.

Economic growth: Economic growth can be defined as the rise in the overall output level in an…

Answered: 14. Consider a nation in which the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3 tries left Suppose instead that China's real GDP growth turns out to be 6.9 percent per year for the next decade. By how much will China's real GDP increase then during the entire decade? China's real GDP will increase by Type percent during the entire decade. (Round your response to one decimal place.) Submit
15. Refer to the table below for the following questions. Country Country A Country B Country C Real GDP per capita (2000) $38,000 $ 3,250 $ 250 Average annual growth rate of real GDP per capita 1% 2.5% 4% a. Calculate the following ratios of real GDP per capita in 2000. i. Country B to Country A ii. Country C to Country A iii. Country C to Country B b. Using the rule of 70, figure out how many years it will take each country to double their real GDP per capita. Round to one decimal point if needed. c. Calculate the real GDP per capita of each country in year 2140. d. Repeat part (a) for year 2140 using the results from part (c). e. Compare your results from parts (a) and (d) and discuss if this example supports the convergence hypothesis.
2. a) Why is the difference between 2% and 3% steady yearly real GDP growth in the US economy a huge difference, if its only a difference of 1%? b) Explain why productivity is so essential for growth of the economy. c) What are two government policies that could increase US economic productivity? d) What is the role of Investment in contributing to productivity?
4. According to Malthus, how does economic growth and population relate to each other?
8. Reinterpret the endogenous growth model in this chapter as follows. Suppose that there are two groups of people in a country, the low- skilled workers and the high-skilled workers. The low-skilled workers have less human cap- ital per person initially than do the high-skilled workers. In the economy as a whole, output is produced using efficiency units of labor, and total factor productivity is z, just as in the endogenous growth model in this chapter. Each individual in this economy accumulates human capital on their own, and each has one unit of time to split between human capital accu- mulation and work. However, now b = bn for the high-skilled, b un for the high-skilled, and u the low-skilled. In the United States, there has been an increase in the gap between the wages of high-skilled workers and low-skilled work- ers, that has occurred over the last 30 years or bị for the low-skilled, for so. Determine how this model can explain this observation, and discuss.
72) According to new growth theory, the accumulation of ________ capital is subject to diminishing returns at the ________ level, but not at the level of the economy as a whole. A) physical; firm B) technological; personal C) knowledge; firm D) physical; production 73) Because knowledge capital is nonexcludable and nonrival, firms have an incentive to ________ the research and development of other firms. A) make bids on B) not use C) ignore D) free ride on 74) When firms benefit from the results of research and development they didn't pay for, we say firms A) are litigious. B) free ride. C) invest in knowledge capital. D) maintain a level playing field. 75) For how long does a patent give a firm the exclusive legal right to a product? A) 10 years B) 17 years C) 20 years D) 50 years 76) A copyright grants the creator of a book, film, or piece of software exclusive legal rights to use the creation for how long? A) 10 years B)…
3. Economic growth determinants Which of the following are true of natural resources as a determinant of economic growth? Check all that apply. Natural resources are the most necessary factor for economic growth. Abundant natural resources will help facilitate economic growth. The presence of natural resources will guarantee rapid economic growth. Countries rich in natural resources may still experience little or no economic growth.
Consider the economies of Tralfamadore and Sporon, both of which produce agricultural products using only land and labour. The following tables show the supply of land, population size, and real GDP for these two economies from 2020 to 2023. Complete the last column of the following two tables by calculating real GDP per capita for the two economies. Tralfamadore Land Real GDP (Dollars) Real GDP per Capita (Dollars) Year (Hectares) Population 2020 20,000 500 4,500 2021 20,000 1,000 10,000 2022 20,000 1,500 16,500 2023 20,000 2,000 24,000 Sporon Land Real GDP Real GDP per Capita (Dollars) Year (Hectares) Population (Dollars) 2020 20,000 1,000 15,000 2021 20,000 2,000 28,000 2022 20,000 3,000 36,000 2023 20,000 4,000 40,000 Rapid population growth tends to threaten economic growth in economies with higher or lower land-labour ratios.
Based on our discussion of the determinants of economic growth, answer the following questions: • ’Devoting a larger share of national output to investment would help restore rapid economic growth and rising living standards.’ Based on our discussion of the determinants of economic growth, do you agree with the above statement? Explain why. • What could the policymakers (i.e., government, central bank) do to increase the investments in the economy? • Do you think that increasing the saving rate could help to increase the economic growth? Explain why. • Do you think that increasing the saving rate is always helpful? I.e., could we increase the saving rate to, say, 90 %? What could be some of the drawbacks of increasing the saving rate to a very high level? Explain.
Question 7 What is meant by economic growth and why is it one of the most important goals macroeconomists seek to achieve? In your explanation, show the relationship between production, consumption, and investment in periods of economic growth?
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?
12. According to Solow's model of economic growth, what determines the growth rate of income per person for a nation that is not in its steady state? What determines the growth rate of income per person for a nation that is in its steady state? In what sense is technological progress necessary for sustained growth of income per person in Solow's model?

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