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Chapter 9: Q. 3 (page 210)

In the situation described in Problem 9-2, suppose that vocational training during the past year enables the people of this nation to repair all capital goods so that they continue to function as well as new. All other factors are unchanged, however. In light of this single change to the conditions faced in this nation, will the nation's economic growth rate for the current year be negative, zero, or positive?

Short Answer

Expert verified

The rate of economic growth is zero.

Step by step solution

01

Economic growth.

The market value of an economy's goods or services increases or decreases when asset values rise or fall. To measure such growth, statisticians often use the percent rate of increase in real gross domestic product, or real GDP.

02

Capital goods.

If educational advancements during the last year enable the inhabitants of this country to mend all capital goods while keeping all other parameters constant, the country will maintain its current level of capital goods.

As a result, its rate of economic growth will be zero.

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Most popular questions from this chapter

Who benefits from the exclusion of skilled foreign workers?

A nation's per capita real GDP was$2,000 in 2017, and the nation's population was5 million in that year. Between 2017 and 2018, the inflation rate in this country was role="math" localid="1651519423079" 5 percent, and the nation's annual rate of economic growth was 10 percent. Its population remained unchanged. What was per capita real GDP in 2018? What was the level of real GDP in2018?

The graph to the right shows a production possibilities curve for 2020 and two potential production possibilities curves for 2021, denoted2021A and2021B

a. Which of the labelled points corresponds to the maximum feasible 2020 production that is more likely to be associated with the curve denoted2021A ?

b. Which of the labelled points corresponds to the maximum feasible 2020 production that is more likely to be associated with the curve denoted2021B ?

Consider the following table displaying annual growth rates for nations X,Yand Z, each of which entered2017 with real per capita GDP equal to$20,000.

a. Which nation most likely experienced a sizable earthquake in late 2017that destroyed a significant portion of its stock of capital goods, but was followed by speedy investments in rebuilding the nation's capital stock? What is this nation's per capita real GDP at the end of2020, rounded to the nearest dollar?

b. Which nation most likely adopted policies in 2017 that encouraged a gradual shift in production from capital goods to consumption goods? What is this nation's per capita real GDP at the end of 2020, rounded to the nearest dollar?

c. Which nation most likely adopted policies in 2017that encouraged a quick shift in production from consumption goods to capital goods? What is this nation's per capita real GDP at the end ofrole="math" localid="1651525075599" 2020 , rounded to the nearest dollar?

Consider Figure 9-8. According to rule of 70, about how many years would have been required for US per capita real GDP to double if it had remained at the average level observed between 1961 and 1980 ? Between 2001 and 2017 .?
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