Bundle: Principles of Microeconomics, 7th + LMS Integrated Aplia, 1 term Printed Access Card
7th Edition
ISBN: 9781305242463
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 22, Problem 8PA
(a):
To determine
Total surplus.
(b):
To determine
The efficient outcome.
(c):
To determine
Preference of the person.
(d):
To determine
Majority preference.
(e):
To determine
Availability of different options.
(f):
To determine
Majority rule.
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5. Download the Excel sheet from Brightspace. The data contains the GDP per capita and GNI
per capita of OECD member countries in 2014 (both figures are reported in US dollars). The
countries are ranked by GDP per capita.
a. Compute the ratio of GNI to GDP for each country (GNI per capita/GDP per capita). What
does this imply about net factor income from abroad for each country?
b. Rank the countries based on the GNI/GDP ratio, starting with the country with the highest
ratio and ending with the country with the lowest ratio. Which country has the highest ratio,
and which has the lowest?
c. Comment on why the countries you identified in the previous question have a large
difference between GDP and GNI? What does the difference imply?
3. Answer the following questions about external wealth.
a. Home has external wealth of $100 million in period t. In t+1, Home purchases $160
million foreign assets, and Foreign purchases $120 million in Home assets. Assume a
world interest rate of 10% per annum. Compute the "change" in external wealth at t+1 for
Home.
b. A country's external wealth was -$1.5 billion at the end of 2015, and its trade balance
was $750 million in 2016. Assume the world interest rate is 5% per annum. What is the
"value" of a country's external wealth at the end of 2016?
Chapter 22 Solutions
Bundle: Principles of Microeconomics, 7th + LMS Integrated Aplia, 1 term Printed Access Card
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