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Chapter 9: Q.2 (page 209)

A nation's capital goods wear out over time, so a portion of its capital goods become unusable every year. Last year, its residents decided to produce no capital goods. It has experienced no growth in its population or in the amounts of other productive resources during the past year. In addition, the nation's technology and resource productivity have remained unchanged during the past year. Will the nation's economic growth rate for the current year be negative, zero, or positive?

Short Answer

Expert verified

The nation's economic growth rate for the current year be negative.

Step by step solution

01

introduction 

The rate at which the real GDP of a nation develops over time from one year to another is called the economic growth rate.

02

explanation

There would have been a decrease in the worth of accessible capital products in the nation and in this way the real GDP would have diminished. The capital merchandise of the nation wears out with time and the nation has not created any capital products during the earlier year where different elements stay unaltered the financial development rate for the ongoing year will be negative.

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Most popular questions from this chapter

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 ?

Why do you suppose that nations with higher degrees of measured distrust of strangers tend to observe lower rates of economic growth, other things being equal?

Brazil has a population of about 210million, with about 150million over the age of 15. Of these, an estimated 25percent, or37.5million people, are functionally illiterate. The typical literate individual reads only about two nonacademic books per year, which is less than half the number read by the typical literate U.S. or European resident. Answer the following questions solely from the perspective of new growth theory:

a. Discuss the implications of Brazil's literacy and reading rates for its growth prospects in light of the key tenets of new growth theory.

b. What types of policies might Brazil implement to improve its growth prospects? Explain.

Consider Figure 9-7, and suppose that we round the rate of growth of per capita real GDP experienced in the European Union between 1981 and 1990 to the nearest full percentage point. Based on the information in Table 9-3, by what percentage would per capita real GDP has increased between 1990 and 2020 if the economic growth rate will have remained at this rounded level?

"The largest change is from zero to one." Does this statement have anything to do with relative growth rates in poorer versus richer countries?
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