Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 16, Problem 14CQ
To determine
Describe the response of an economist based on rapid growth and high income levels.
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India has a huge economy that produces lots of goods and services (7th-highest nominal GDP), is still fairly poor (142nd-highest nominal GDP per capita), but has a rapidly increasing standard of living (7th-highest real GDP growth rate).
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India has a huge economy that produces lots of goods and services (7th-highest nominal GDP), is still fairly poor (7th-highest real GDP growth rate), but has a rapidly increasing standard of…
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Chapter 16 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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- 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_forwardFill 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.arrow_forwardThe following table reports real GDP per person for several different economies in the years 1960 and 2010. It also gives each economy's average annual growth rate during this period. For example, real GDP per person in the Central African Republic was $1,010 in 1960, and it actually declined to $628 by 2010. The Central African Republic's average annual growth rate during this period was -0.95%, and it was the poorest economy in the table in the year 2010. The real GDP-per-person figures are denominated in U.S. dollars with a base year of 2005. The following exercises will help you to understand the different growth experiences of these economies.arrow_forward
- Draw a graph of "catch-up" that shows where you would expect to see a country with low saving rates and low levels of health and education. How would you expect real GDP per capita to grow in a country like this?arrow_forwardWhich of the following statements best describes the relationship between Economic Growth and Literacy Rates ? A. Literacy Rates decline as Economic Growth improves because Education is less useful in a developed economy. B. Increased Literacy initially stimulates Economic Growth by improving Labour Productivity but declines as the Opportunity Cost of Education increases with long-term Economic Growth. C. Increased Literacy stimulates Economic Growth by increasing Labour Productivity; People consume more Education as the Economy continues to grow. D. There is no correlation between Economic Growth and Literacy Rates.arrow_forwardWhat creates or stimulates the rate of economic growth in the economy, in macroeconomicsarrow_forward
- Draw a graph of "catch-up" that shows where you would expect to see a country with low saving rates and low levels of health and education. How would you expect real GDP per capita to grow in a country like this? Explain your answer.arrow_forwardGraphically explain the economy’s production possibility curve in terms of economic growth.arrow_forwardWhat has been the average annual growth rate of U.S. real GDP per person over the 120 years from 1900 to 2020? In which decade, beginning with the 1960s, was the growth of potential GDP per person greatest and slowest? Over the 120 years from 1900 to 2020, the average annual growth rate of U.S. real GDP per person is _____ %arrow_forward
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