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Week 13 – Introduction to Macroeconomics (Chapters 16 and 17) 1. In the years to 2050 the Japanese population is expected to decline, while the fraction of the population that is retired is expected to increase sharply. What are the implications of these population changes for total output and average living standards in Japan, assuming that average labour productivity continues to grow? What if average labour productivity stagnates? Solution 1: Slowing population growth and an increased share of retired people both imply slower growth in the number of people employed. If average labour productivity (output per employed worker) continues to grow at earlier rates, total output will still grow more slowly than before, because of…show more content…
3. The following data give total output, total population and numbers employed for Germany and Turkey in 2009. Find output per person and average labour productivity in each country. How do living standards compare? | Germany | Turkey | Output (billions of $s) | 1,631 | 590 | Population (millions) | 83 | 77 | Numbers employed (millions) | 40 | 23 | Solution 3: Germany: output per person is $1,631 billion / 83 million people = $19,651 per person; average labour productivity is $1,631 billion / 40 million employed = $40,775 per person employed. Japan: output per person is $590 billion / 77 million people = $2,662 per person; average labour productivity is $590 billion / 23 million employed = $25,652 per person employed. Both the living standard (output per person) and average labour productivity (output per worker) are higher in Germany than in Japan. But the difference between living standards in the two countries is more marked than the difference in labour productivity. 4. Data released in February 2011 suggests that China has overtaken Japan as the world’s second largest economy as measured by the absolute size of its GDP. Does this necessarily imply that the real living standards of Chinese citizens are now higher than those of their Japanese counterparts? Solution
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