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QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.8 $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use , Y = AKU.4LO.6, and to estimate China's final GDP (in trillions of $s) and then calculat percent change from its initial GDP of $20.5 trillion. O China's GDP grows but not as fast as the capital stock O China's GDP grows at the same rate as its capital stock O China's GDP grows faster than its capital stock China's GDP doesn't grow. so none of the above

QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.8 $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use , Y = AKU.4LO.6, and to estimate China's final GDP (in trillions of $s) and then calculat percent change from its initial GDP of $20.5 trillion. O China's GDP grows but not as fast as the capital stock O China's GDP grows at the same rate as its capital stock O China's GDP grows faster than its capital stock China's GDP doesn't grow. so none of the above

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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The People's Republic of China has an estimated $101.54 trillion of capital with a depreciation rate of 5.2% per year. If its GDP is $20.5 trillion and its saving rate is 45% would we expect China's GDP to be growing or shrinking? O growing, I> dK growing, I< dK shrinking, I> dK shrinking, I< dK QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.89% to $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use , Y = AKU.4L0.0, and to estimate China's final GDP (in trillions of $s) and then calculate the percent change from its initial GDP of $20.5 trillion. O China's GDP grows but not as fast as the capital stock O China's GDP grows at the same rate as its capital stock O China's GDP grows faster than its capital stock China's GDP doesn't grow, so none of the above
Transcribed Image Text:The People's Republic of China has an estimated $101.54 trillion of capital with a depreciation rate of 5.2% per year. If its GDP is $20.5 trillion and its saving rate is 45% would we expect China's GDP to be growing or shrinking? O growing, I> dK growing, I< dK shrinking, I> dK shrinking, I< dK QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.89% to $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use , Y = AKU.4L0.0, and to estimate China's final GDP (in trillions of $s) and then calculate the percent change from its initial GDP of $20.5 trillion. O China's GDP grows but not as fast as the capital stock O China's GDP grows at the same rate as its capital stock O China's GDP grows faster than its capital stock China's GDP doesn't grow, so none of the above
Expert Solution
Step 1

The growth in the GDP will depend on the contribution of capital towards the GDP growth. 

The positive rise in the capital will drive up economic growth. 

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