Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 25, Problem 7IAPA
To determine
To explain:
The economy has the higher real
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
China invests almost 50 percent of its annual production in new capital compared to 15 percent in the United States. Capital per hour of labor in China is about 25 percent of that in the United States. Explain which economy has the higher real GDP per hour of labor, the faster growth rate of labor productivity, and which experiences the more severe diminishing returns.
Consider a small island country whose only industry is fishing. The following table shows information about the small economy in two different years.
Complete the table by calculating physical capital per worker as well as labour productivity.
Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labour.
NOTE: both drop down questions choices are (an increase or, decrease)
is it true or false that the growth rate of the GDP per worker for an economy where the capital to output ratio is constant represent the long run economic growth? why
Chapter 25 Solutions
Foundations of Economics (8th Edition)
Ch. 25 - Prob. 1SPPACh. 25 - Prob. 2SPPACh. 25 - Prob. 3SPPACh. 25 - Prob. 4SPPACh. 25 - Prob. 5SPPACh. 25 - Prob. 6SPPACh. 25 - Prob. 7SPPACh. 25 - Prob. 8SPPACh. 25 - Prob. 9SPPACh. 25 - Prob. 10SPPA
Ch. 25 - Prob. 11SPPACh. 25 - Prob. 12SPPACh. 25 - Prob. 1IAPACh. 25 - Prob. 2IAPACh. 25 - Prob. 3IAPACh. 25 - Prob. 4IAPACh. 25 - Prob. 5IAPACh. 25 - Prob. 6IAPACh. 25 - Prob. 7IAPACh. 25 - Prob. 8IAPACh. 25 - Prob. 9IAPACh. 25 - Prob. 10IAPACh. 25 - Prob. 1MCQCh. 25 - Prob. 2MCQCh. 25 - Prob. 3MCQCh. 25 - Prob. 4MCQCh. 25 - Prob. 5MCQCh. 25 - Prob. 6MCQCh. 25 - Prob. 7MCQCh. 25 - Prob. 8MCQ
Knowledge Booster
Similar questions
- If the share of GDP used for capital goods is 0.08, the growth rate of productivity is 0.09, the growth rate of population is 0.02, the depreciation rate is 0.02, the initial capital/output ratio is 3.75, and the elasticity of GDP with respect to capital is 0.1, then what is the growth rate of the GDP per capita? Use three decimal places.arrow_forwardWhat is the difference between extensive and intensive growth? Why was the Soviet Union successful in terms of extensive growth under Stalin, but failed to succeed in terms of intensive growth during the reform periods under Khrushchev and Gorbachev?arrow_forwardCountry A and country B have the same Cobb-Douglas production function except country A has a capital stock of 5,000, a population of 12,000 and employment of 10,000. Country B has a capital stock of 8,000, a population of 24,000 and employment of 20,000. Technology, national saving rate, depreciation rate and population growth rate are the same in the two countries Today country B has a higher standard of living but country A will catch up. Today country B has a higher standard of living and country A will not catch up. Today country A has a higher standard of living but country B will catch up. Today country A has a higher standard of living and country B will not catch up.arrow_forward
- Suppose some of the country's capital is suddenly destroyed. If the depreciation rate, savings rate, and production function remain unchanged, then the real growth rate will _____ in the short run and the steady-state level of capital will _____ increase, decrease, or stay the same?arrow_forwardConsider a small island country whose only industry is printing. The following table presents information about this small economy in two different years. Complete the table by calculating physical capital per worker and labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor.arrow_forwardk Indicate whether each of the following statements is true or false. a. Country A's labor share is 60%, Country B's labor share is 70%, and labor is growing at a rate of 3% in both countries. Assuming capital and technology are not growing in either country, Country B has a higher growth rate of output. (Click to select) ▼ b. Country A's labor share is 40%, Country B's labor share is 70%, and labor is growing at a rate of 10% in country A and 6% in country B. Assuming capital and technology are not growing in either country, Country A has a higher growth rate of output. (Click to select) c. Labor is growing at a negative rate in country A and a positive rate in country B, so country B must have a higher growth rate of output. (Click to select) d. Labor and capital are both growing more quickly in Country A than in Country B. so Country A must have a higher growth rate of output. (Click to select)arrow_forward
- Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run output per capita will be greater in B than in A. economic growth will be higher in A than in B. more information is needed to answer this question. output per capita will be greater in A than in B.arrow_forwardEconomic growth and economic development are essentially one and the same. Comment on this assertion. Mention and briefly explain four sources of economic growth What causes short-run fluctuations in economic growth?arrow_forwardThe table below shows the level of real GDP and real GDP per capita growth rates for a select set of countries for the year 2016. Determine the number of years it will take for the standard of living to double in each country. Instructions: Round your answers to one decimal place. Growth Rates and the Rule of 72 Country Real GDP (millions) Growth Rate of Real GDP per Capita (percent) Number of Years for Standard of Living to Double Canada $1,445,260 0.8% Madagascar 37,297 1.8 Philippines 843,692 5.1 Sweden 488,759 2.8 United States 12,341,233 0.2arrow_forward
- The government can achieve permanent higher growth rates by having two determinants of growth. The two primary determinants of growth are capital accumulation and technological progress. Capital changes when there are changes in investment and therefore, the saving rate. Because the saving rate cannot increase forever, capital accumulation cannot cause permanent changes in economic growth. Technological progress on the other hand, can result in permanent changes in economic growth.arrow_forwardImagine two countries, i and j. You have the following information: si = 2 sj s= saving rate hi= hj h=human capital 2Ai = Aj A=technology What can you infer about long-run income per worker differences between these countries? Explain formally.arrow_forwardProductivity and growth policies Consider a hypothetical small island nation in which the only industry is cloud computing. The following table displays information about the economy over a two year period. Complete the table by calculating physical capital per worker as well as labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Year 2039 2040 Physical Capital (Servers) 200 480 Labor Force (Workers) Based on your calculations, productivity from 2039 to 2040. 100 120 Physical Capital per Worker (Servers) Labor Hours (Hours) 4,500 4,200 in physical capital per worker from 2039 to 2040 is asociated with Suppose you're in charge of establishing economic policy for this small island country. Output (TB of data storage) 40,500 75,600 Imposing restrictions on foreign ownership of domestic capital Subsidizing research and development…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
