Homework Help is Here – Start Your Trial Now!
Business
Economics
Over many years, small differences in growth rates can have large effects on the level of income. This question will help you understand this important point. Consider an initial value of real GDP equal to Yo. If real GDP grows at a rate of g percent annually, after N years real GDP will equal Yo(1+g). Now consider the following table. Let the initial level of GDP in all cases be 100. a. By using the formula provided above, compute the level of real GDP in column 1 for each year. For example, in Year 1, real GDP will equal 100x (1.01)¹ 101. For each year, compute the GDP. Complete the rest of the columns. (Round your responses to two decimal places.) b. In year 20, how much larger (in percentage terms) is real GDP in the 2.0-percent growth case compared with the 1.5-percent growth case? Real GDP in the 2.0-percent growth case is % larger. (Round your response to the nearest whole number) c. In year 50, how much larger is real GDP in the 2.0-percent growth case compared to the 1.5-percent growth case? Real GDP in the 2.0-percent growth case is % larger. (Round your response to the nearest whole number.) Real GDP with Alternative Growth Rates 1.0% 1.5% 2.0% $100 $100 $100 $101 101.50 $102 103.03. 104.57 $106.12 122.02 134.69 148.59 $164.46 Year- 0 1 3 20 50 $210.52 2.5% 100 102.50 107.69 163.86 269.16 $343.71

Over many years, small differences in growth rates can have large effects on the level of income. This question will help you understand this important point. Consider an initial value of real GDP equal to Yo. If real GDP grows at a rate of g percent annually, after N years real GDP will equal Yo(1+g). Now consider the following table. Let the initial level of GDP in all cases be 100. a. By using the formula provided above, compute the level of real GDP in column 1 for each year. For example, in Year 1, real GDP will equal 100x (1.01)¹ 101. For each year, compute the GDP. Complete the rest of the columns. (Round your responses to two decimal places.) b. In year 20, how much larger (in percentage terms) is real GDP in the 2.0-percent growth case compared with the 1.5-percent growth case? Real GDP in the 2.0-percent growth case is % larger. (Round your response to the nearest whole number) c. In year 50, how much larger is real GDP in the 2.0-percent growth case compared to the 1.5-percent growth case? Real GDP in the 2.0-percent growth case is % larger. (Round your response to the nearest whole number.) Real GDP with Alternative Growth Rates 1.0% 1.5% 2.0% $100 $100 $100 $101 101.50 $102 103.03. 104.57 $106.12 122.02 134.69 148.59 $164.46 Year- 0 1 3 20 50 $210.52 2.5% 100 102.50 107.69 163.86 269.16 $343.71

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter15: Measuring A Nation's Income
Section: Chapter Questions
Problem 7PA
See similar textbooks
icon
Related questions
Question
Over many years, small differences in growth rates can have large effects on the level of income. This question will help you understand this important point. Consider an initial value of real GDP equal to Yo. If real GDP grows at a rate of g percent annually, after N years real GDP will equal Yo(1+g). Now consider the following table. Let the initial level of GDP in all cases be 100. a. By using the formula provided above, compute the level of real GDP in column 1 for each year. For example, in Year 1, real GDP will equal 100x (1.01)¹=101. For each year, compute the GDP. Complete the rest of the columns. (Round your responses to two decimal places.) b. In year 20, how much larger (in percentage terms) is real GDP in the 2.0-percent growth case compared with the 1.5-percent growth case? Real GDP in the 2.0-percent growth case is% larger. (Round your response to the nearest whole number.) c. In year 50, how much larger is real GDP in the 2.0-percent growth case compared to the 1.5-percent growth case? Real GDP in the 2.0-percent growth case is % larger. (Round your response to the nearest whole number.) Year 0 1 3 20 50 Real GDP with Alternative Growth Rates. 2.0% $100 $102 1.0% $100 $101 $103.03. 122.02 $164.46 1.5% 2.5% $100 100 101.50 $102.50 104.57 106.12 107.69 134.69 $ 148.59 163.86 $210.52 $269.16 343.71
Transcribed Image Text:Over many years, small differences in growth rates can have large effects on the level of income. This question will help you understand this important point. Consider an initial value of real GDP equal to Yo. If real GDP grows at a rate of g percent annually, after N years real GDP will equal Yo(1+g). Now consider the following table. Let the initial level of GDP in all cases be 100. a. By using the formula provided above, compute the level of real GDP in column 1 for each year. For example, in Year 1, real GDP will equal 100x (1.01)¹=101. For each year, compute the GDP. Complete the rest of the columns. (Round your responses to two decimal places.) b. In year 20, how much larger (in percentage terms) is real GDP in the 2.0-percent growth case compared with the 1.5-percent growth case? Real GDP in the 2.0-percent growth case is% larger. (Round your response to the nearest whole number.) c. In year 50, how much larger is real GDP in the 2.0-percent growth case compared to the 1.5-percent growth case? Real GDP in the 2.0-percent growth case is % larger. (Round your response to the nearest whole number.) Year 0 1 3 20 50 Real GDP with Alternative Growth Rates. 2.0% $100 $102 1.0% $100 $101 $103.03. 122.02 $164.46 1.5% 2.5% $100 100 101.50 $102.50 104.57 106.12 107.69 134.69 $ 148.59 163.86 $210.52 $269.16 343.71
Expert Solution
steps

Step by step

Solved in 5 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Growth Rate of GDP
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Exploring Economics
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Economics:
Economics:
Economics
ISBN:
9781285859460
Author:
BOYES, William
Publisher:
Cengage Learning
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
SEE MORE TEXTBOOKS