11. Consider the growth model diagram below. If an economy starts with 12 units of capital (labeled with an arrow) then should we expect it to be growing or shrinking? dK I 12 25 K
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At 12 units of capital, I>dK.
Since investment is greater than depreciation, the economy grows.
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- Following graph shows business cycle fluctuation in a hypothetical economy . " Y " denotes year , and " Q " denotes quarter . What do points A , B , C , and D denote ? Write at least a sentence each about what these points denote . Also , explain what represent the curve segments : A to B , B to C and C to D. Lastly , because economic activity fluctuates , how is long - term growth possible ?Assume that an economy currently has a nominal GDP of $500 billion. If the economy were to grow at 3%, calculate what nominal GDP will be in five years, ten years, twenty years, and forty years if it is able to sustainthat same growth rate each year.Following graph shows business cycle fluctuation in a hypothetical economy. "Y" denotes year, and "Q" denotes quarter. What do points A, B, C, and D denote? Write at least a sentence each about what these points denote. Also, explain what represent the curve segments: A to B, B to C, and C to D. Lastly, because economic activity fluctuates, how is long-term growth possible?
- An economy produces three products, bags, computers and shirts. The prices and quantities of these products in 2020 and 2021 are shown in the table below: 2020 2021 Price Price Quantity Quantity 300 $10 $12 330 Bags Computers $600 100 $650 110 Shirts $18 2,000 $20 2,200 2020 2021 Measure the nominal and real GDP for 2019 and 2020, using 2020 as the base year. Measure the nominal and real GDP growth rate in 2021. Which value is more accurate in measuring the growth rate of the economy? Explain. (b) The information on price and quantity of three products consumed by a typical household in the year 2020 and 2021 is given by the table below 2020 2021 Price Quantity Price 10 Quantity $5 $5.50 12 Fish Beef $10 5 $11 4 Train Ride $8 20 $9 22 Using 2020 as the base year, measure the CPI for 2021 and the inflation rate in 2021. Does this inflation rate correctly measure the cost of living changes for households in 2021? Explain.Describe the various components of fluctuations in economic activity over time. Because economic activity fluctuates, how is long-term growth possible?Given the following information, what is the growth rate of nominal GDP? Y0 real GDP = $1200 (in millions) Y1 real GDP = $1400 (in millions) Y0 price level = 110 Y1 price level = 115 The growth rate of nominal GDP is ......???%. (Round your answer to the nearest hundredth.)
- Suppose that the annual rates of growth of real GDP of Econoland over a five-year period were sequentially as follows: 3 percent, 1 percent, -2 percent, 4 percent, and 5 percent. What was the average of these growth rates in Econoland over these 5 years? What term would economists use to describe what happened in year 3?Suppose an economy begins in steady state. By what proportion does per capita GDP change in the long run in response to each of the following changes? (a) The investment rate doubles (b) the depreciation rate falls by 10% (c) The productivity level rises by 10% (d) an earthquake destroys 75% of the capital stock (e) A more generous immigration policy leads the population to double.Refer to Table 4.3 “The Model’s Prediction for Per Capital GDP” on page 83. Why is the “observed per capita GDP” in the last column 1.000 for the U.S.? A. The U.S. per capita GDP was $1,000 in real terms for the year given in the table B. It means the U.S. economy produces 100% of what it’s supposed to produce C. It means the U.S. economy uses 100% of all available capital in the country D. U.S. values are set, or normalized, to 1 while the other countries’ values are all relative to the U.S. values
- 11) The relationship between the growth rate of an economic variable, gt, and its level, yt, can be approximated by A) gt = yt - yt - 1. B) gt = logt - log yt - 1. C) yt = log gt - log gt - 1. D) log gt = yt - yt - 1. 12) The business cycle component of the log of real per-capita GNP is equal to A) log of actual real GNP - log of trend GNP. B) log of trend GNP ÷ log of actual real GNP. C) log of trend GNP - log of actual real GNP. D) log of actual real GNP ÷ log of trend GNP. 13) For the study of economic growth, it is most helpful to examine movements in ________; for the study of business cycles, it is most helpful to examine movements in ________. A) trend GNP; trend GNP B) trend GNP; deviations from trend in GNP C) deviations from trend in GNP; trend GNP D) deviations from trend in GNP; deviations from trend in GNP 14) Over the twentieth century, growth in per-capita GNP was highest A) immediately prior to the Great…9 An island nation is in a steady state. A major hurricane passes over the nation and destroys half of its capital stock. Using the Solow Model for growth, what happens to gross domestic product (GDP), investment, and net investment in the short run and the long run? Illustrate with a figure and explain.Chapter 24: Question for ReviewIf the price of imported French wine rise, is the CPI or the GDP deflator affected more? Why?Chapter 25: Problem 2Suppose that society decided to reduce consumption and increase investment.a. How would this change affect economic growth?b. What group in society would benefit from this change? What group might be hurt?Chapter 28: problem 5Economists use labor-market data to evaluate how well an economy is using its most valuable resource-its people. Two closely watched statistics are the unemployment rate and the employment-population ratio (calculated as the percentage of the adult population that is employed). Explain what happens to each of these in the following scenarios. In your opinion, which statistic is the more meaningful gauge of how well the economy is doing?a. An auto company goes bankrupt and lays off its workers, who immediately start looking for new jobs.b. After an unsuccessful search, some of the laid-off workers quit looking for new…
