The effect of an earthquake on the potential GDP of a poor land.

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Answer 1

Question

Chapter 23, Problem 1DQ

To determine

The effect of an earthquake on the potential GDP of a poor land.

Expert Solution & Answer

Explanation of Solution

The distortion of factories in the poorland due to an earthquake will reduce the national output of the poorland. This would reduce the potential GDP of the poorland. The acquisition of advanced technology from a rich land will boost the poor land’s productive capacity and thereby increase the potential GDP.

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M” method Given the following model, solve by the method of “M”. (see image)

As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

Question

Chapter 23, Problem 1DQ

To determine

The effect of an earthquake on the potential GDP of a poor land.

Expert Solution & Answer

Explanation of Solution

The distortion of factories in the poorland due to an earthquake will reduce the national output of the poorland. This would reduce the potential GDP of the poorland. The acquisition of advanced technology from a rich land will boost the poor land’s productive capacity and thereby increase the potential GDP.

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Answer 3

Question

Chapter 23, Problem 1DQ

To determine

The effect of an earthquake on the potential GDP of a poor land.

Expert Solution & Answer

Explanation of Solution

The distortion of factories in the poorland due to an earthquake will reduce the national output of the poorland. This would reduce the potential GDP of the poorland. The acquisition of advanced technology from a rich land will boost the poor land’s productive capacity and thereby increase the potential GDP.

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Answer 4

Question

Chapter 23, Problem 1DQ

To determine

The effect of an earthquake on the potential GDP of a poor land.

Expert Solution & Answer

Explanation of Solution

The distortion of factories in the poorland due to an earthquake will reduce the national output of the poorland. This would reduce the potential GDP of the poorland. The acquisition of advanced technology from a rich land will boost the poor land’s productive capacity and thereby increase the potential GDP.

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Answer 5

Chapter 23, Problem 1DQ

To determine

The effect of an earthquake on the potential GDP of a poor land.

Expert Solution & Answer

Explanation of Solution

The distortion of factories in the poorland due to an earthquake will reduce the national output of the poorland. This would reduce the potential GDP of the poorland. The acquisition of advanced technology from a rich land will boost the poor land’s productive capacity and thereby increase the potential GDP.

Answer 6

Chapter 23, Problem 1DQ

To determine

The effect of an earthquake on the potential GDP of a poor land.

Expert Solution & Answer

Explanation of Solution

The distortion of factories in the poorland due to an earthquake will reduce the national output of the poorland. This would reduce the potential GDP of the poorland. The acquisition of advanced technology from a rich land will boost the poor land’s productive capacity and thereby increase the potential GDP.

Answer 7

Chapter 23, Problem 1DQ

To determine

The effect of an earthquake on the potential GDP of a poor land.

Answer 8

Expert Solution & Answer

Explanation of Solution

The distortion of factories in the poorland due to an earthquake will reduce the national output of the poorland. This would reduce the potential GDP of the poorland. The acquisition of advanced technology from a rich land will boost the poor land’s productive capacity and thereby increase the potential GDP.