EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Chapter 25, Problem 2MCQ
To determine
To calculate:
The value by which real GDP grows per year.
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If the annual GDP growth rate on average in a country is 5%, the current GDP is $10 trillion, how many years will it take to double GDP?
a.
1400
b.
10
c.
14
d.
70
e.
5
Which 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.
1. Growth experiences
Small differences in the rate of economic growth can lead to large differences in living standards. Consider two countries: Upper Richistan and Lower
Richistan. Currently, real GDP per person (average income) is $55,000 in Upper Richistan and $13,750 in Lower Richistan.
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 ʼn years, where g represents the growth rate of real GDP per person (in decimal form-that is, 1.2% is entered as 0.012):
Average Income in n Years = Current Average Income × (1 + g)'
n
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)
1.2
1.6
4
4.3
Suppose Upper Richistan's growth rate is expected to grow at 1.2% and remain there for the next 100 years. Which of the following growth rates in
Lower Richistan would cause the average…
Chapter 25 Solutions
EBK FOUNDATIONS OF ECONOMICS
Ch. 25 - Prob. 1SPPACh. 25 - Prob. 2SPPACh. 25 - Prob. 3SPPACh. 25 - Prob. 4SPPACh. 25 - Prob. 5SPPACh. 25 - Prob. 6SPPACh. 25 - Prob. 7SPPACh. 25 - Prob. 8SPPACh. 25 - Prob. 9SPPACh. 25 - Prob. 10SPPA
Ch. 25 - Prob. 11SPPACh. 25 - Prob. 12SPPACh. 25 - Prob. 1IAPACh. 25 - Prob. 2IAPACh. 25 - Prob. 3IAPACh. 25 - Prob. 4IAPACh. 25 - Prob. 5IAPACh. 25 - Prob. 6IAPACh. 25 - Prob. 7IAPACh. 25 - Prob. 8IAPACh. 25 - Prob. 9IAPACh. 25 - Prob. 10IAPACh. 25 - Prob. 1MCQCh. 25 - Prob. 2MCQCh. 25 - Prob. 3MCQCh. 25 - Prob. 4MCQCh. 25 - Prob. 5MCQCh. 25 - Prob. 6MCQCh. 25 - Prob. 7MCQCh. 25 - Prob. 8MCQ
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Similar questions
- List the areas where government policy can help economic growth.arrow_forwardWhat are the advantages of backwardness for economic growth?arrow_forwardWhich of the following will contribute to economic growth? a. Technologies that reduces production costs. b. Higher taxes. c. Lower taxes. d. Tightened industrial pollution regulations. e. None of the above.arrow_forward
- 26. Which of the following is the per capita real GDP growth rate if a country''s real GDP growth rate in a year was 6% and its population grow at 2 percent. a.7% b.4% c.3% d.5%arrow_forwardAll of the countries that grant considerable economic freedom have experienced positive rates of economic growth. A. True B. Falsearrow_forwardOver the 120 years from 1900 to 2020, the average growth rate of U.S. real GDP per person was 2 percent a year. What does this tell us? A. Real GDP grew faster than the population. B. The growth rate of real GDP was 2 percent a year on average. C. Real GDP grew slower than the population. D. The growth rate of real GDP was less than 2 percent a year on average.arrow_forward
- Is it a good idea to maximize economic growth by producing and consuming more and more economic goods and services?arrow_forwardFor each growth rate below, () use the rule of 70 to calculate how long it will take incomes to double, and (i) if each country starts with an income of $1,000 per capita, use the exponential growth equation to calculate what the income will be in 30 years. Instructions: Round your answers to one decimal place. Tears for incomes Incomes in to 30 years double a. 4 percent 175 10 b. 7 percent C. 2.5 percent d. 10 percent e. 3 percent 28 233arrow_forwardWhy does economic growth matter in an economyarrow_forward
- Which of these is NOT a factor of economic growth? decrease in the savings rate O investment in human capital increase in the size of the labor force O increase in the capital stockarrow_forwardDistinguish between economic growth and economic development. How important is the accumulation of saving to a country’s economic growth?arrow_forwardWhat are the differences between economic growth and economic development? List 1 measurement for each concept and explain how it is calculated. Give examples of a Latin American country with a high level of growth, but little economic development, and one country with higher levels of development than growth.arrow_forward
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