MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 6, Problem 2DQ
To determine
Higher rate of economic growth .
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Consider a nation in which the volume of goods and services is growing by 5 percent per year. What is the likely impact of this high rate of growth on the power and influence of its government relative to other countries experiencing slower rates of growth? What about the effect of this 5 percent growth on the nation’s living standards? Will these also necessarily grow by 5 percent per year, given population growth? Why or why not?
Suppose A, B and C are quantities that change over time. It can be shown that if A = BC then the percent growth in A equals the percent growth in B plus the percent growth in C. Suppose that GDP grows at 6% and population grows at 2%. Then what percent does GDP per person grow at?
Why might it be necessary to reduce consumer spending in order to attain fastereconomic growth? Would it be worth the sacrifice?
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