Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Chapter 6, Problem 3E
To determine
Calculate the growth rate.
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How large will Canada’s GDP be in 25 years? The answer depends on what the rate of growth in GDP will be over that 25-year period. A mathematical formula we can use for this calculation is the following:
GDP2041 = GDP2016 (1 + g)25
where GDP2041 is the level of GDP in the year 2041, GDP2016 is the level of GDP in the year 2016, and g is the rate of growth in GDP. Assume that GDP in 2016 is $1000 million and assume that the value of g is 0.035 (3.5 percent per year). What will be the value of GDP in 2041? Now suppose that the value of g is 0.040 (4.0 percent per year). What will be the value of GDP in 2041 given this slightly larger rate of growth? What does this result say about the importance of policies that promote even slightly faster rates of growth in GDP?
Only answer the 2nd MCQ question of the growth rate of output per capita
Suppose a company discovers a breakthrough lubricant that reduces the amount of wear on mechanical systems. How will this affect the nation's steady-state level of capital per worker and income per worker? Use either a graph or equation to support your answer.
Chapter 6 Solutions
Macroeconomics (Fourth Edition)
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- A mathematical approximation called the rule of 70 tells us that the number of years that it will take something that is growing to double in size is approximately equal to the number 70 divided by its percentage rate of growth. Thus, if Mexico's real GDP per person is growing at 7 percent per year, it will take about 10 years ( =70/7) to double. Apply the rule of 70 to solve the following problem. Real GDP per person in Mexico in 2005 was about $ 11,000 per person, while it was about $ 44,000 per person in the United States. If real GDP per person in Mexico grows at the rate of 5 percent per year, about how long will it take Mexico's real GDP per person to reach the level that the United States was at in 2005? (Hint: How many times would Mexico's 2005 real GDP per person have to double to reach the United States' 2005 real GDP per person?)arrow_forwardGross domestic product per capita is the ratio of total gross domestic product to population.gross domestic product, a unit of timemonetary value of the final goods and services produced in the economy (let be in TL) and population, unitaccording to the number of people in that economy at the time,a) write down the unit of measure and size of the gross domestic product variable per capita. b) what is the relationship between gross domestic product per capita, total gross domestic product and population growth?Express your conclusions in a sentence by making inferencearrow_forwardAssume the real GDP per capita in the UK has been steadily increasing for the past SIXTY years. Would we be correct in assuming the life expectancy of the average US citizen has also been steadily increasing in these past fifty years? Why or why not?arrow_forward
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