Small differences in the rate of economic growth can lead to large differences in living standards. Consider two countries: Upper Richistan and Lower Richistan. Currently, real GDP per person (average income) is $55,000 in Upper Richistan and $13,750 in Lower Richistan. Suppose you want to project what the real GDP per person will be in each country 100 years from now. The following formula shows how to compute the average income in n years, where g represents the growth rate of real GDP per person (in decimal form-that is, 1.2% is entered as 0.012): Average Income in n Years = Current Average Income x (1 + g)" Use the growth formula to find the correct amounts to select to fill in the following table. Growth Rate Average Income after 100 Years (Percent) (Dollars) 1.2 1.6 4 4.3 Suppose Upper Richistan's growth rate is expected to grow at 1.2% and remain there for the next 100 years. Which of the following growth rates in Lower Richistan would cause the average income in Lower Richistan to exceed the average income in Upper Richistan in 100 years? Check all that apply. 1.2% 1.6% 4.0% Upper Richistan Lower Richistan 4.3%

Small differences in the rate of economic growth can lead to large differences in living standards. Consider two countries: Upper Richistan and Lower Richistan. Currently, real GDP per person (average income) is $55,000 in Upper Richistan and $13,750 in Lower Richistan. Suppose you want to project what the real GDP per person will be in each country 100 years from now. The following formula shows how to compute the average income in n years, where g represents the growth rate of real GDP per person (in decimal form-that is, 1.2% is entered as 0.012): Average Income in n Years = Current Average Income x (1 + g)" Use the growth formula to find the correct amounts to select to fill in the following table. Growth Rate Average Income after 100 Years (Percent) (Dollars) 1.2 1.6 4 4.3 Suppose Upper Richistan's growth rate is expected to grow at 1.2% and remain there for the next 100 years. Which of the following growth rates in Lower Richistan would cause the average income in Lower Richistan to exceed the average income in Upper Richistan in 100 years? Check all that apply. 1.2% 1.6% 4.0% Upper Richistan Lower Richistan 4.3%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose country X currently produces $1000 of goods and services per year with a constant growth rate of 2.0% per year. Country Y's production is currently $800 with growth of 3.0% per year. Using the rule of 72, how long does it take for country X's production to double? Using the rule of 72, how long does it take for country Y's production to double? years After how long will the two countries have the same level of production? Estimate the level of production when the two countries produce the same amount. $ 36 years 24 years
> Consider the data in the table below: Per capita GDP, 2017 Saving rate (%) TFP (Ā) United States 1.000 23.5 1.000 Switzerland 1.151 28.8 1.052 Answer the following questions using the Solow growth model. 9. Assuming no differences in TFP (ignore the last column) and no differences in the rate of depreciation between the U.S. and Switzerland, use the data in the table to predict the ratio of per capita GDP of Switzerland relative to that of the U.S. in the steady states. How much percent richer is Switzerland than the U.S. in steady state? 10. Now do the same exercise assuming TFP is given by the levels in the last column. Now how much percent richer is Switzerland than the U.S. in steady state? Consider the data in the table below: Per сapita GDP, 2017
Assume real per capita GDP in West Swimsuit is $8,000 while in South Darlinia it is $2,000. The annual growth rate in West Swimsuit is 2.33%, while in South Darlinia it is 7%. How many years will it take for South Darlinia to catch up to the real per capita GDP of West Swimsuit? What will the income of the two countries be when it is equal? type answer only. Do it correctly. Multiple votes will given accordingly.
Suppose the initial real per capita GDP for countries A and B is 7 thousand dollars. If the annual growth rates of countries A and B are respectively 2.6% and 4.6% , what is the the ratio GDP of country B over GDP of country A after 67 years? Round your answer to the nearest first decimal
If a country’s GDP grows by 10% per year, why isn’t the number of years it takes to double the GDP simply 100%/10% = 10 years?
11. In 2022 a country has the following data: GDP TFP Capital Labor Y A K L 400 1,100 20 The production function is Y = A¿KQ4 LQ.6 and the capital stock evolves according to Kt+1 growth rate of labor is 0.6% and TFP growth is 2%. Assume that population is equal to labor. Use the Solow model to calculate per-capita GDP in 2024 (two years later). (1 – d)Kt + It. The saving rate 22%, the depreciation rate is 10%, the (а) 498.32 (b) 504.42 (c) 516.96 (Right answer) (d) 548.87
Country alpha and beta initially have the same real GDP per capita. Country Alpha experiences no economic growth, while Country Beta grows at a sustained rate of 10 percent. In 14 years, Country Beta's GDP will be approximately that of Country Alpha one-half double quadruple one-fourth
A country has the following data on the average growth rates of its real GDP, population and capital accumulation over several decade: Real GDP growth rate=4.5%; Population growth rate=2%; Capital stock growth rate=4%. If the labor share to output=0.75 and capital share=0.25, how much is the contribution of improvement in total factor productivity (A) in the growth of real GDP?
What must be the relationship between the rate of growth of technological change (g) and the population growth rate (L/L) for income per capita to continue to increase?
in england, suppose GDP per capita grows by 3.0% per year for 19 years. by how many times does this economy grow?
Real GDP per capita in the country of Arcadia grew from about $4.545 in 1900 to about $40.064 in 2008, which represents an annual growth rate of 2.04 percent IH Arcadia continues to grow at this rate, calculate the number of years when its real GDP per capita will double years. (Enter your response as an integer)
What information does this fact give us about the growth rates of other variables?