Exploring Macroeconomics
8th Edition
ISBN: 9781544363332
Author: Robert L. Sexton
Publisher: Sage Publications
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Question
Chapter 12, Problem 5P
To determine
To explain:
The way there can be difference between the standard of living between two countries over time as a result of divergent growth rates.
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Fill in the blank
Italy is a relatively rich country with per-capita GDP of $28,000. India is a relatively poor with per-capita GDP of only $3,500. However, India is growing rapidly at a growth rate of 5% per year. We want to find how many years it will take for India’s per capita GDP to equal Italy’s current per-capita GDP of $28,000.
How many times must India's per-capita GDP double in order to reach Italy's per-capita GDP?
India's per-capita GDP must double ________________________ times.
Use the rule of 70 to find how many years it will take for India's per-capita GDP to double once at a 5% growth rate.
Fill in the third blank.
Italy is a relatively rich country with per-capita GDP of $28,000. India is a relatively poor with per-capita GDP of only $3,500. However, India is growing rapidly at a growth rate of 5% per year. We want to find how many years it will take for India’s per capita GDP to equal Italy’s current per-capita GDP of $28,000.
How many times must India's per-capita GDP double in order to reach Italy's per-capita GDP?
India's per-capita GDP must double __________ times.
Use the rule of 70 to find how many years it will take for India's per-capita GDP to double once at a 5% growth rate.
Doubling time: ______________________ years
How many years will it take for India to reach Italy’s current level of GDP per capita?
It will take ________________ years for India to reach Italy's current level of GDP per capita.
Suppose that society decided to reduce consumption and increase investment.
How would this change affect economic growth?
Chapter 12 Solutions
Exploring Macroeconomics
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Similar questions
- Fill in the second blank. Italy is a relatively rich country with per-capita GDP of $28,000. India is a relatively poor with per-capita GDP of only $3,500. However, India is growing rapidly at a growth rate of 5% per year. We want to find how many years it will take for India’s per capita GDP to equal Italy’s current per-capita GDP of $28,000. How many times must India's per-capita GDP double in order to reach Italy's per-capita GDP? India's per-capita GDP must double __________ times. Use the rule of 70 to find how many years it will take for India's per-capita GDP to double once at a 5% growth rate. Doubling time: ______________________ yearsarrow_forwardSmall differences in the rate of economic growth can lead to large differences in living standards. Consider two countries: Fritolaysia and Khandibar. Currently, real GDP per person (average income) is $60,000 in Fritolaysia and $20,000 in Khandibar. Suppose you want to project what the real GDP per person will be in each country 100 years from now. The following formula shows how to compute the average income in n years, where g represents the growth rate of real GDP per person (in decimal form-that is, 1.5% is entered as 0.015): Average Income in n Years Current Average Income x (1 + g)" Use the growth formula to find the correct amounts to select to fill in the following table. Growth Rate Average Income after 100 Years (Percent) (Dollars) 1.5 1.7 4 4.2 1 1.5% 1.7% Suppose Fritolaysia is expected to grow at 1.7% for the next 100 years. Which of the following growth rates in Khandibar would cause the average income in Khandibar to exceed the average income in Fritolaysia in 100…arrow_forward
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