Answered: Our simple growth model implies that…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Our simple growth model implies that

Select one:

a.countries with higher K/L ratios will have higher economic growth.

b.increases in K/L increase Y/L but at a diminishing rate.

c.capital has no impact on Y/L.

d.there is little prospect of poor countries catching up with rich countries.

In the past few years, several high profile celebrities have campaigned for debt relief for HIPC's (Highly Indebted Poor Countries). While debt relief can potentially play a useful role in poverty reduction there are also some possible downsides such as

Select one:

a.reducing a poor nations exports.

b.increasing government deficits.

c.encouraging further debt by setting up an expectation that future debts will also be forgiven.

d.under cutting local markets for food and other commodities given as aid.

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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1. When talking about a simple growth model, it can be said that the long-term growth is highly dependent upon an efficient production process with enough investment and savings by people.

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