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Assume that each $1 billion in investment in capital goods generates 0.4 percentage point of the average percentage rate of growth of per capita real GDP, given the nation's labor resources. Firms have been investing exactly $6 billion in capital goods each year, so the annual average rate of growth of per capita real GDP has been 2.4 percent. Now a govemment that fails to consistently adhere to the rule of law has come to power, and firms must make $100 million in bribe payments to gain official approval for every $1 billion in investment in capital goods. In response, companies cut back their total investment spending to $4 billions per year. If other things are equal and companies maintain this rate of investment, calculate the nation's new average annual rate of growth of per capita real GDP. percent. (Enter your response as a percentage rounded to one decimal place.)

Assume that each $1 billion in investment in capital goods generates 0.4 percentage point of the average percentage rate of growth of per capita real GDP, given the nation's labor resources. Firms have been investing exactly $6 billion in capital goods each year, so the annual average rate of growth of per capita real GDP has been 2.4 percent. Now a govemment that fails to consistently adhere to the rule of law has come to power, and firms must make $100 million in bribe payments to gain official approval for every $1 billion in investment in capital goods. In response, companies cut back their total investment spending to $4 billions per year. If other things are equal and companies maintain this rate of investment, calculate the nation's new average annual rate of growth of per capita real GDP. percent. (Enter your response as a percentage rounded to one decimal place.)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume that each $1 billion in investment in capital goods generates 0.4 percentage point of the average percentage rate of growth of per capita real GDP, given the nation's labor resources. Firms have been investing exactly $6 billion in capital goods each year, so the annual average rate of growth of per capita real GDP has been 2.4 percent. Now a govermment that fails to consistently adhere to the rule of law has come to power, and firms must make $100 million in bribe payments to gain official approval for every $1 billion in investment in capital goods. In response, companies cut back their total investment spending to $4 billions per year. If other things are equal and companies maintain this rate of investment, calculate the nation's new average annual rate of growth of per capita real GDP. percent. (Enter your response as a percentage rounded to one decimal place.)
Transcribed Image Text:Assume that each $1 billion in investment in capital goods generates 0.4 percentage point of the average percentage rate of growth of per capita real GDP, given the nation's labor resources. Firms have been investing exactly $6 billion in capital goods each year, so the annual average rate of growth of per capita real GDP has been 2.4 percent. Now a govermment that fails to consistently adhere to the rule of law has come to power, and firms must make $100 million in bribe payments to gain official approval for every $1 billion in investment in capital goods. In response, companies cut back their total investment spending to $4 billions per year. If other things are equal and companies maintain this rate of investment, calculate the nation's new average annual rate of growth of per capita real GDP. percent. (Enter your response as a percentage rounded to one decimal place.)
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