a.
To state: whether the statement is true, false or uncertain:in advanced as well as emerging and developing countries in 2009 output growth is negative.
a.
Answer to Problem 1QAP
The statement is false that both the emerging and the advanced economies of the world grew at the negative rate during the year of 2009.
Explanation of Solution
The world economic crisis in the year of 2009 was one of the major economic crises which emanated from the financial crises in the United States which lead to the bankruptcy of the major banks of the United States.The effect of this crises which began from United States, was visible in the Euro market and the other emerging economies of the world.
There was the decline in the consumption levels of the individuals in the United States with the suspicion of the crises taking the major form much like The Great Depression.This was followed by the decline in the housing prices in USA which lead to the eventual decline in the prices of the stock market.
The crises further lead to the decline in the levels of the investment and eventually in the third quarter of the year of 2008, the growth rate turned negative.The economic crises in the year of 2009 lead to the decline of the growth rates of the major as well as the emerging economies of the world.The crises lead to the average economies of the advanced economies to grow at -3.4%, however the growth in the emerging economies in spite of being 3.5 percent lower than the average of the growth rate between the years 2000-2007, persisted to be positive.
b.
To state: whether the statement is true, false or uncertain: after 2009 the output growth of world recovered to its prerecession level.
b.
Answer to Problem 1QAP
The statement is False.
Explanation of Solution
Post the period of the economic crises there were signs of the slow improvement and the repaired of the economies globally. There were sign of improvement of the economies post recession period but it would not be justified state that the situation returned to the levels of the prerecession period. The growth post crises period has been uneven and unimpressive. This can be suggested by the fact that the United States was able to grow positively but the problem of
c.
To state: whether the statement is true, false or uncertain: between 2007 and 2010 the stock prices around the world fell and later recovered to prerecession level.
c.
Answer to Problem 1QAP
The above statement is False.
Explanation of Solution
It will be not right enough to state that the prices of the stock reached to its prerecession level with the recovery process post the crises. This fact can be said to be true for the developing and the emerging economies of the world but this fact was untrue in the case of United States.
d.
To state: whether the statement is true, false or uncertain: theunemployment rate in the United Kingdom is much lower than compared to the rest of the Europe.
d.
Answer to Problem 1QAP
The above statement is True.
Explanation of Solution
Unemployment is one of the problems that the Euro countries faces while the other being the presence of the common currency. There is high level of unemployment in the European countries and this problem is more severe in the countries of Greece and Spain where the rate of unemployment is 25% and 23% in the respective manner. The problem of unemployment is however less severe in United Kingdom which has been successful in its attempt to remove the rigidities of the labor market like United States which the other European countries have not yet been able to achieve.
e.
To state: whether the statement is true, false or uncertain: the high growth rate in China is a myth in fact it is a product solely of misleading official statistics.
e.
Answer to Problem 1QAP
The above statement is False.
Explanation of Solution
China is one of the leading economies of the world which has witnessed tremendous
f.
To state: whether the statement is true, false or uncertain: the unemployment rate increased in European countries when majority of them adopted common currency.
f.
Answer to Problem 1QAP
The above statement is False.
Explanation of Solution
The problem of unemployment in the European countries is not linked with the fact that they have a common currency but instead the problem lies behind their ineffective labor policies, most of the European counties have stringent labour laws which make it difficult for the employers to lay of the employees in order to protect them. The employers are thus hesitant to provide job opportunities in their countries.
g.
To state: whether the statement is true, false or uncertain: in order to avoid recessions and increasing interest rates the Federal reserve lowers rate of interest when wanting to lower the growth rate in an economy.
g.
Answer to Problem 1QAP
The above statement is True.
Explanation of Solution
The above statement is true with the respect to the set of actions taken by the Fed in the year of crises where it lowered the interest rates so that there the spending can be decreased. This made the firms and the individuals to invest which lead to the rise in the demand which were slowed down in the market during the time of the crises. In the similar manner when the Fed has to stop the growth of the economy it increases the rate of the interest which slows down the demand and the eventual growth of the economy in USA.
h.
To state: whether the statement is true, false or uncertain: there is difference in per person output in Euro area, the United States and China.
h.
Answer to Problem 1QAP
The above statement is True.
Explanation of Solution
It is true that the output per person in the United States, Euro area and China are different from each other. While considering the success of the economy the economists considers the two aspects in which the output person is one of them.
i.
To state: whether the statement is true, false or uncertain: in United States rate of interest were near zero or at zero.
i.
Answer to Problem 1QAP
The above statement is True.
Explanation of Solution
The Federal Reserve in its attempt to restore the economy of the United States of America reduced the interest rates to zero so that individuals and the industries can afford to make purchases and raise the demand from the market which was suffering decline during the period of the crises.
Want to see more full solutions like this?
Chapter 1 Solutions
Macroeconomics (7th Edition)
- please type the answer by computer, so i can see it clearly, thank you!!! Please answer in detail Determine whether the following statement is True, False, or Uncertain, and explain your answer. Statement: The Solow model suggests that economic growth is always and everywhere the result of sustained technological innovationarrow_forwardExplain the following as effects of low policy rates to the growth of an economy: 1. It can cause inflationary pressure 2. It might lead to a boost in economic growth 3. Investments are more desirable 4. There will be relatively low borrowing cost for government.arrow_forwardBased on the Neoclassical Growth Model explain in detail what are the critical determinants of economic growth. Also, specify related assumptions.arrow_forward
- The period of rapid and sustained increase in real output per capita that began in the Western World with the Industrial Revolution is known as the period of Group of answer choices technological change. social progress. modern economic growth. creative destruction.arrow_forwardA common Wall Street rule of thumb is that the growth rate ought to be roughly equal to the: Group of answer choicesarrow_forwardA country starts in steady state. Due to a lost war, the country has to give up territory containing 50% of its capital stock and 10% of its population. This will cause Group of answer choices the economy to converge to a new higher steady state. the growth rate of output to rise initially as the economy begins to converge to the old steady state. the growth rate of output to rise initially as the economy begins to converge to a new lower steady state. the economy to enter a period of negative growth.arrow_forward
- Region Real GDP per capita (2010) Average annual growth rate of real GDP per capita for 2010-2080 Country A $750 2% Country B $1,500 5% Use the information in the table above to answer the following question. Would the case of Country A and Country B be a good example if you want to show that the convergence hypothesis holds? Why or why not? Use the rule of 70 and Country A-to-Country B ratio of real GDP per capita in 2010 and 2080 to support your answer.arrow_forwardPrepare an introduction and conclusion for the following question; Identify THREE public policies that can stimulate employment and facilitate economic growth in an economy.arrow_forwardWith regards to macroeconomic growth, the most common goal is to achieve: a gradual/progressive increase in GDP a fast and significant increase in GDP in a short amount of time high unemploymentarrow_forward
- What should we infer when our models make predictions that are not reflected in the world? Obviously there is a level of inaccuracy in every model, but is it better to presume we misunderstand the world or to use such errors to find problems preventing the world from matching our model? Explain your answer. Robert Lucas argues that the main model of efficient investment is remarkably inaccurate. What is the key critique of Lucas and how was this problem addressed in our model? Many developing countries struggle with debt due to high interest rates and often low returns. Given what you learned in this chapter, why does this challenge exist? What might be a policy to alleviate it?arrow_forwardThe Trump administration's policies to increase long-run economic growth included all of the following except A. increasing the employment–population ratio. B. reducing business taxes to increase investment spending. C. increasing business startups by reducing regulations and taxes on small businesses. D. raising the federal minimum wage.arrow_forwardWhat two variables are most important for sustained long-run growth? options: Increasing capital and increasing total factor productivity Decreasing taxes and increasing government expenditures Increasing money supply and decreasing interest rates Increasing consumption and increasing investment in inventoriesarrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education