True or false? Low saving impedes growth in capital, productivity, and living standards for a closed economy, but not for an open economy. You'd better explain your answer by graph. (Hint: Consider elasticity of demand/supply in loanable fund market.)

True or false? Low saving impedes growth in capital, productivity, and living standards for a closed economy, but not for an open economy. You'd better explain your answer by graph. (Hint: Consider elasticity of demand/supply in loanable fund market.)

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter7: Economic Growth: Theory And Policy

Section: Chapter Questions

Problem 5DQ

See similar textbooks

Related questions

Q: Must some members of society receive greater rewards than others?

A: Labor productivity: - Labor productivity is the capacity or ability of labor to produce goods and…

Q: In a perfectly competitive market, each firm produces its last unit at the same marginal cost. a…

A: As per the question the perfectly competitive market usually refers to that market where all the…

Q: Figure 1 Use this figure for questions 14-20. This figure shows costs for a firm in a perfectly…

A: Total revenue is defined as the total receipts which have been received by the seller after selling…

Q: What is unemployment? How to measure unemployment?

A: Unemployment: - unemployment is that portion of the labor force that is able to do work and looking…

Q: want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is…

A: A cash flow diagram is a monetary apparatus used to address the sources of income related with a…

Q: Felix and Janet are farmers. Each one owns a 20-acre plot of land. The following table shows the…

A: There are two farmers, i.e., Felix and Janet Each owns a 20-acre plot of land Each produces Rye and…

Q: 1.The Data of unemployment is given Below: * Unemployment popculation is 5.5 million *…

A: "Unemployment indicate the number of people who are not working or out of work but are actively…

Q: If the central bank of India buys foreign exchange reserves in the foreign exchange market, this…

A: Balance of Payment is an accounting records of all monetary transaction occurred between nations in…

Q: Rogue Corporation is planning to replace an old machine. The annual cost of operating the old…

A: * SOLUTION :- From the given information the calculation is given below as ,

Q: Question 36 W Suppose that Y, VN, VK, and N1-N₂ (1+(Y/N, -yJ/y] where y, is the subsistence level of…

A: The aggregate level of output refers to the total output produced by applying the factors of…

Q: Suppose Edison is currently using combination D, producing one boat per day. His opportunity cost of…

A: Production possibility frontier depicts the combination of two goods that a nation or individual can…

Q: Suppose the inverse demand curve on ore is given by P = X - 0.29 Q. Ore can be either mined or…

A: The curve that depicts various quantities of goods and services being demanded by individuals at…

Q: What is the relationship between the marginal and average propensity to consume in the standard…

A: Concept: Average propensity to consume is the ratio of total consumption to total income which…

Q: Consider the Dutch floricultural Industry and use the porter's diamond model to explain the…

A: The Porter's Diamond Model is a precious stone formed structure that explains the parts that can…

Q: The YTM on a three year bond is 5%. What is the average expected short rate over the life of the…

A: The yield to maturity (YTM) is the annual percentage rate of return on a bond if the asset is held…

Q: The movie "Return of the Jedi" earned $264 million in 1983 when it was released. The CPI in 1983 was…

A: In economics, when the consumer price index increases from one year to another year, it means that…

Q: Fruity Apples is the monopolist in the market for apples. The following equations describe the…

A: A perfectly competitive firm produces at P = MC in the short run. We have following information: P…

Q: In which of the following situations will total revenue increase? Price elasticity of demand is 1.2…

A: Price elasticity of demand is used by enterprises when they want to adjust their demand elasticity.…

Q: 5. (b) Consider the two-person, two goods economy given by: W₁ = (1/2, 1/2) U₁ = 2X11 + X12, U2=X21…

A: Given information U1=2X11+X12 U2=X21+2X22 Endowment W1=(1/2,1/2)

Q: The process of developing a service plan

A: A service plan is a comprehensive approach that businesses use to manage client interactions. An…

Q: Bobby has been recently hired to work on a highway construction crew for the summer. The work is…

A: According to the question, Bobby was recently employed for the summer to work on a highway…

Q: 8. Decide whether you agree or disagree with each of the following statements and explain your…

A: Dear student, you have asked multiple questions in a single post. In such a case, I will be…

Q: Explain why in the medium run an increase in the price of oil will cause an increase in the…

A: The jobless who will work and are effectively searching for a task communicated as a percent of the…

Q: One way in which economists measure the performance of an economy is by looking at a widely used…

A: In general terms economic performance usually tells or describe the overall achievement of the…

Q: II b c MC ATC P-MR-AR

A: The significant kinds of market structure incorporate monopoly, monopolistic competition, oligopoly,…

Q: A Bank offers you a 250,000 pesos, 3 years and 6 months term loan at 4. 78 percent annual interest.…

A: PV = 250,000 N = 42 Months r = 0.0478/12 = 0.0039833

Q: The weak form of the efficient market hypothesis implies that: No one can achieve abnormal…

A: The answer is - Investors cannot achieve abnormal returns, on average, using technical analysis,…

Q: How will the changes in the market affect the FIRM represented in Table 5-1 in Question 8 in the…

A: In a perfectly competitive market, the firm is a price taker as three are many sellers and many…

Q: Refer to the figure above. If the market had been competitive but was taken over by a cartel, as…

A: The equilibrium is established where the P =MC. But in the cartel profit is maximized where the…

Q: Nominal GDP is $6,900, real GDP $5,600. GDP deflator equals OA 100. OB. 123.21. OC. 143.31. OD.…

A: In Simple language we can say that the basic GDP or gross domestic product is gradually calculated…

Q: 19. Suppose that you are a trader at the stock market. T-Mobile's stocks currently trade at $45 and…

A: In economics, the term "expectations" refers to the projections or perspectives that decision makers…

Q: What is the term business cycle. Please explain it little bit.

A: Business cycles are periods of economic boom followed by periods of economic contraction.They have…

Q: If a market is a natural monopoly, the firm's average total cost curve will most resemble the…

A: We know that the fixed cost for a natural monopoly is extremely high. A natural monopoly is like…

Q: How should cultural norms in destinations guide gender equality and women empowerment programs and…

A: Women’s Empowerment Policy and Gender Equality documents USAID's invention of a successful and…

Q: 4. For MARR of 6% and each alternative having a life of 20 years with no salvage value and cost…

A: We will find the present worth of all three alternatives and then the alternative with the greatest…

Q: Suppose demand is represented by P = 500.5Q, and supply is represented by P = 4 + 1.5Q. If the…

A: Introduction We have given demand and supply function. We have to calculate total surplus before…

Q: 019 unemployment rate? Moyment rate is 3.7 percent. to 1 decimal place. RIGS FOT Item Labor force…

A: Unemployed people are those who are willing to do work but can not find a paid job. Labor force is…

Q: Write T if the statement is True, and F if otherwise. 1. Isocost curves show the cost of the firm in…

A: An Iscost curve is a curve that implies a combination of inputs that a firm can buy to produce a…

Q: tea Candonia has a comparative advantage in the production of while Sylvania has a comparative…

A: Opportunity cost refers to the next best alternative forgone

Q: The following graph shows the marginal and average product curves for labor, the firm's only…

A: Marginal cost is the additional cost which occur by producing one more unit of good or service. Here…

Q: Henry takes put a home-equity loan for $50,000. He deposits the loan proceeds into an account used…

A: Second mortgages are a type of consumer financing similar to a home equity loan. Homeowners can…

Q: Assume, in producing one unit of a good X, an agent can exert either the good effort (G) or the bad…

A: Given that; In producing one unit of a good X, an agent can exert either the good effort (G) or the…

Q: Assume the Table below shows the total co schedule for a perfectly competitive firm. Output TVC ($)…

A: Marginal cost refers to the change in the total cost when the one additional unit of output is…

Q: 1. One way of screening in the automobile insurance market is for companies to A. offer policies…

A: 1. In the insurance market, it can be seen that some of the market participants do not reveal their…

Q: Explain the term random walk in consumption. Under what conditions will consumption follow such a…

A: Random walk in consumption:- Since consumers usually modify regular consumption whenever they get…

Q: Assume that the level of autonomous consumption in an economy equals 600, the level of planned…

A: "Macroeconomic equilibrium occurs at a point where aggregate supply of the economy equates the…

Q: Unemployment rate 5% Participation rate 62.5% Not in the labor force 60 million

A: Given data Unemployment rate = 0.05 Participation rate = 0.625 Not in the labor force…

Q: csonsider the following IS-IR-PC m = 99 - 0.2*r r = 3 pi = pi^e + 0.17*(Y-Y*) where Y* = 100 and…

Q: Ellen is downloading labor market data for the most recent month , but her connection is slow and…

A: Unemployment Rate = 5% Participation rate = 62.5% Not In labour force = 60 mn

Q: Question 25 The defining characteristic of a natural monopoly is Group of answer choices constant…

A: In monopoly, eqm Q(quantity) is found by the intersection of MC(marginal cost) and MR(marginal…

Question

True or false? Low saving impedes growth in
capital, productivity, and living standards for a
closed economy, but not for an open economy.
You'd better explain your answer by graph.
(Hint: Consider elasticity of demand/supply in
loanable fund market.)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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

Question 1:- Suppose a country has a gross savings rate of 25%, a depreciation rate of 2%, and an incremental capital output ratio (lCOR) of 2.2. Using the Harrod-Domar growth model, a) find the implied rate of growth of total GDP in the country. b) How much would the rate of savings have to increase to raise the growth rate of total GDP to 10%? c) Is your answer consistent with the Harrod-Domar model? Explain.
If the U.S. government ran a smaller budget deficit, how would this affect the market for loanable funds, ie, which curve would shift and in which direction, in a open economy context?
Please Draw a diagram for Saving and Investmetn in a small open economy. Assume the world real interest rate is BELOW the closed equilibrium interest rate for a random country that you drew. Is this country a foreign borrower or foreign lender in the world? Please explain what the intuition for the investment and savings functinos.. Like the say for a Home investors and the Home savers. Please draw out an image i am a visual learner and that is what will help me understand it best.
Explain the difference between foreign direct investment (FDI) and foreign portfolio investment (FPI)? Explain which one is more useful to accelerate economic growth of home country.
Suppose a closed economy had public saving of -$1 trillion and private saving of $3 trillion. What are national saving and investment for this country? B $2 trillion, $2 trillion $2 trillion, $3 trillion C) $3 trillion, $3 trillion $4 trillion, $2 trillion
A. Explain the concept of Ricardian Equivalence. Do you believe it holds in practice? Why or why not? Explain. B. Under what circumstances might an increase in worldwide interest rates r* be beneficial for a small open economy (SOE)? Explain. C. What argument, based on macroeconomic theory, might a government use to justify shutting down a newspaper critical of its policies? If you were asked to provide a counterargument, what would it be? Explain.
Suppose that every additional 3 percentage points in the investment rate boosts GDP growth by 1 percentage point. Assume also that all investment must be financed with consumer saving. Note: Investment rate = Investment/GDP The economy is currently characterized by Consumption: $11 trillion Saving (= Investment): $3 trillion GDP: $14 trillion If the goal is to raise the growth rate by 2 percentage points, a. by how much must investment increase? billion b. by how much must consumption decline? billion
Question 3Consider an economy described by the production function:Y = F(K, L) = K0.3 L0.7 a. What is the per-worker production function?b. Assuming no population growth or technological progress, find the steady-state capital stock per worker, output per worker, and consumption per worker as a function of the saving rate and the depreciation rate.c. Assume that the depreciation rate is 10 percent per year. Make a table showing steadystate capital per worker, output per worker, and consumption per worker for saving ratesof 0 percent, 10 percent, 20 percent, 30 percent, and so on. (You will need a calculator with an exponent key for this.) What saving rate maximizes output per worker? What saving rate maximizes consumption per worker?
Assume that a country's per-worker production is y = k1/2, where y is output per worker and kis capital per worker. Assume also that 10 percent of capital depreciates per year (= 0.10) 2 andthere is no population growth or technological change.a. If the saving rate (s) is 0.4, what are capital per worker, production per worker, andconsumption per worker in the steady state?b. Solve for steady-state capital per worker, production per worker, and consumption perworker with s = 0.6.c. Solve for steady-state capital per worker, production per worker, and consumption perworker with s = 0.8.d. Is it possible to save too much? Why?
Suppose in a closed economy with positive national saving, consumption is 70% of GDP, taxes net of transfers are 30% of total consumption and investment, and government spending is less than investment. Which of the following statements is true? (a) Public saving is greater than private saving. (b) Private saving is 9% of GDP. (c) Public saving is less than 10% of GDP. (d) Investment is less than 10 Also give Why other False.
How could higher capital requirements potentially help the economy interms of fnancial stability?
If a country is running a government budget surplus, why is (T - G) on the left side of the saving-investment identity?