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Chapter 18: Q. 4 (page 412)

Consider the estimates that the World Bank has assembled for the following nations:

Rank the nations in order, starting with the one you would expect to have the highest rate of economic growth, other things being equal. Explain your reasoning.

Short Answer

Expert verified

List of nations in order of GDP is explained in the steps.

Increased productivity leads to a higher standard of life and, as a result, a higher GDP. As a result, economic growth per capita increases.

Step by step solution

01

Introduction.

GDP represents the monetary value of a country's final goods and service those that are purchased by the end user produced over a specific period of time (say a quarter or a year). It counts all of the product produced within a country's borders.

02

List of Nations by prior of GDP.

CountryPercentage of Per capita GDPRank
Angola838
1
Togorole="math" localid="1651825502907" 281
2
Bosnia-Herzegovina52
3
Uruguay474
Morocco19
5
03

Reason for the list.

Angola, with a per capita GDP of 838percent, has the highest rate of economic growth. Productivity gains are the primary driver of economic growth per capita. Productivity refers to the ability to produce more goods and services with the same number of inputs.

Increased productivity leads to a higher standard of life and, as a result, a higher GDP. As a result, economic growth per capita increases.

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Most popular questions from this chapter

Assume that each 1billion in net capital investment generates 0.3percentage point of the average percentage rate of growth of per capita real GDP, given the nation's labor resources. Firms have been investing exactly 6billion in capital goods each year, so the annual average rate of growth of per capita real GDP has been 1.8percent. Now a government that fails to consistently adhere to the rule of law has come to power, and firms must pay 100million in bribes to gain official approval for every 1 billion in investment in capital goods. In response, companies cut back their total investment spending to 4 billion per year. If other things are equal and companies maintain this rate of investment, what will be the nation's new average annual rate of growth of per capita real GDP?

Why do you suppose that many observers regard India's agricultural productivity issues related to land use as analogous to the problems arising from dead capital?

Suppose that every 500 billion of dead capital reduces the average rate of growth in worldwide per capita real GDP by 0.1 percentage point. If there is 10 trillion in dead capital in the world, by how many percentage points does the existence of dead capital reduce average worldwide growth of per capita real GDP?

In terms of the basic arithmetic of economic growth, through what mechanism do improvements in labor and capital productivity help to boost the rate of growth of per capita real GDP?

Explain why population growth can have uncertain effects on economic growth.
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