Macroeconomics: Principles, Problems, & Policies
Macroeconomics: Principles, Problems, & Policies
20th Edition
ISBN: 9780077660772
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
Question
Book Icon
Chapter 8, Problem 1DQ
To determine

Measurement and the importance of economic growth.

Expert Solution & Answer
Check Mark

Explanation of Solution

Economic growth is measured as a percentage rate of growth per quarter or per year. Generally, economic growth is measured in terms of either an increase in real GDP over some time period or an increase in real GDP per capita over a period of time.

The economic growth in terms of real GDP can be calculated by using the following formula

Growth rate of real GDP = Real GDPPresentReal GDPPreviousReal GDPPrevious×100 (1)

The economic growth in terms of real GDP per capita can be calculated by using the following formula:

Growth rate of real GDPper capita=(Real GDP per capitaPresentReal GDP per capitaPrevious)Real GDP per capitaPrevious×100 (2)

Economic growth is important because it helps to reduce poverty, protect the environment and cultivate art without harming the existing level of consumption and investment.

For a wealthy nation such as the United States, with a GDP in the neighborhood of $10 trillion, the 0.5 percentage point difference between 2.5 and 3.0 percent amounts to $50 billion a year (which is a very big amount). Therefore, the difference between a 2.5% and a 3% annual growth rate has great significance over several decades.

Economics Concept Introduction

Concept introduction:

Economic growth: Economic growth is defined as either a rise in real GDP over a period of time or a rise in real GDP per capita over a period of time.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Case Study: The Impact of Ebola on Tax Revenue in the DRC                                                                                         Background: The Democratic Republic of the Congo has experienced mulitiple outbreaks, with the 2018-2020 outbreak being one of the most severe. The outbreak had profound effects on public health, the economy and government operations. The DRC's economy already fragile due to policital instability and conflict, faced additional stain as the Ebola virus spread across several provinces. Economic disruption: The Ebola outbreak led to significant disruptions in the affected regions. Businesses were forced to close or reduce operations due to quarantine measures and the fear of contagion. this resulted in a sharp decline in economic activities, particularly in sectors such as agriculute, mining and trade. reduced consumer spending and interruptions in supply chains further exacerbated the economic downturn. Impact on Tax Revenue: the economic…
Key shortcomings of the Human Capital approach to measuring the monetary value of benefits of new treatments are that it Will generate lower benefits for male lives on average Will generate higher benefits for female lives on average Will tend to OVERVALUE improvements in quality of life Will tend to UNDERVALUE improved survival for people out of labour force
One of the key concepts in economics that underpins the necessity of making tough choices and confronting difficult tradeoffs through some form of collective decision-making is called Production Consumption Exchange Equity Scarcity
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Macroeconomics
Economics
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning
Text book image
MACROECONOMICS FOR TODAY
Economics
ISBN:9781337613057
Author:Tucker
Publisher:CENGAGE L