Which of the following is not a determinant of economic growth? O a. Growth in physical capital. O b. Technological improvement. O c. Growth in financial capital. O d. Growth in the labour force. Growth in human capital. O e.
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- An economy starts off with a GDP per capita of 5,000. How large will the GDP per capita be if it grows at an annual rate of 2 for 20 years? 2 for 40 years? 4 for 40 years? 6 for 40 years?Suppose that total capital and labour both increase by the Suppose that total capital and labour both increase by the same percentage amount so that the amount of capital per worker k does not change. Writing the production function in per-worker terms, y = f(k), requires that this increase in capital and labour must not change the amount of output produced per worker y. Use the growth accounting equation to show that equal percentage increases in capital and labour will leave output per worker unaffected only if aK + aN = 1. Suppose that total capital and labour both increase by theA. Investment in "infrastructure" represents spending on: O roads, bridges, canals, etc. O human capital (education) O government institutions O innovation to physical capital B. Which of the following was not one of Thomas Malthus' assumptions regarding population and economic growth? O Per-capita income would increase. O The economy was agriculturally based O The supply of land was fixed O The population would continue to increase
- Computing growth rates (II): Suppose k, l, and m grow at constant rates givenby g k, gl , and gm. What is the growth rate of y in each of the following cases?(a) y = k 1/3(b) y = k 1/3l 2/3(c) y = mk 1/3l 2/3(d) y = mk 1/4l 3/4(e) y = mk 3/4l 1/4(f ) y = 1klm2 1/2(g) y = 1kl2 1/4 11/m2 3/4a) Assume a hypothetical society that decides to reduce consumption (production of consumption goods) and increase investment (production of capital goods). How would this change affect economic growth? What groups in society would benefit from this change? What groups might be hurt? kindly solve all partsSuppose that work hours in New Zombie are 200 in year 1 and productivity is $8 per hour worked. What is New Zombie’s real GDP? If work hours increase to 210 in year 2 and productivity rises to $10 per hour, what is New Zombie’s rate of economic growth? Explain why sustained long-term economic growth comes from increases in labor productivity. Why do you think the trend rate of U.S. productivity growth has increased since the earlier 1973–1995 period? The quantity of labor and increases in labor productivity are important sources of economic growth. Between 1953 and 2015, in the US economy the labor force increased from 63 million to 158 million workers. Productivity growth has usually been the more significant factor. To calculate real GDP in a given year you have to multiply hours worked by productivity. Suppose that New Zombie has adopted the framework used by the US Bureau of Labor Statistics to calculate its labor force statistics. Following information is extracted from a…
- Productivity is generally measured as: O output per year. O nominal output over time. O real output over time. O output per worker. AAssume a hypothetical society that decides to reduce consumption (production of consumption goods) and increase investment (production of capital goods). i. How would this change affect economic growth? ii. What groups in society would benefit from this change? What groups might be hurt?Write out the equation for output growth with capital, labor and total factor productivityas determinants of growth. Suppose that the shares of capital and labor are respectively0 .3 and 0.7. If labor supply grows by 10% what would be the growth rate of outputassuming that there is no change in the other determinants? What would happen to percapita output if labor supply growth is entirely due to population growth?
- Suppose that work hours in New Zombie are 200 in year 1 and productivity is $8 per hour worked. What is New Zombie’s real GDP? If work hours increase to 210 in year 2 and productivity rises to $10 per hour, what is New Zombie’s rate of economic growth? Explain why sustained long-term economic growth comes from increases in labor productivity. Why do you think the trend rate of U.S. productivity growth has increased since the earlier 1973–1995 period?Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more physical capital per worker and so it has more real GDP per worker than the other. Finally, suppose that the saving rate in both countries increases from 5 percent to 7 percent. In the long run we would expect that a. the growth rate will not change in either country. b. the country that started with less physical capital per worker will grow faster. c. the country that started with more physical capital per worker will grow faster. d. both countries will grow and at the same rate.(a) What three institutions do you consider are the most important for a country’s economic growth? Briefly explain. (b) Suppose a “leader country” has a real GDP per capita of $50,000, whereas a “follower country” has a real GDP per capita of $25,000. Next, suppose there is a military takeover in the leader country which causes the growth of real GDP per capita to fall to zero percent. In the meantime, real GDP per capita growth in the follower country rises to 5 percent. If these rates continue for a long period of time, how many years will it take for the follower country to catch up to the living standard of the leader country? (c) If you were to hold the size of the labor force in an economy constant, how would increasing the spending in capital goods help to make workers more productive and increase economic growth? What about the effect on economic growth from increasing the size of the labor force through population growth while physical and human capital remain constant?
