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Chapter 6: Q2. (page 250)

Argentina used to be as rich as Canada; now it’s much poorer. Does this mean that Argentina is poorer than it was in the past? Explain.

Short Answer

Expert verified

Argentina is poorer than Canada, but it has grown since the past levels.

Step by step solution

01

Explanation

Argentina and Canada were equally rich before World War II. After the Second World War, Canada achieved steady growth. However, Argentina lagged on the growth path due to political instability and extremely high inflation for a prolonged period. The growth rate was slowed over time.

Consequently, Argentina remained poorer as compared to Canada. However, it does not mean that the country has dropped from past levels. It has achieved growth from its previous levels.

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Most popular questions from this chapter

In 2008, problems in the financial sector led to a drying up of credit around the country: home-buyers were unable to get mortgages, students were unable to get student loans, car-buyers were unable to get car loans, and so on.

  1. Explain how the drying up of credit can lead to compounding effects throughout the economy and result in an economic slump.
  2. If you believe the economy is self-regulating, what would you advocate that policymakers do?
  3. If you believe in Keynesian economics, what would you advocate that policymakers do?

Use Figure 6-1 to compare the nature of the Great Depression to the Great Recession. What about the Great Depression made Montgomery Ward’s decision not to expand in the 1940s appear rational?
  1. Which of the following questions involve microeconomics, and which involve macroeconomics? In each case, explain your answer.
  2. Why did consumers switch to smaller cars in 2008?
  3. Why did overall consumer spending slow down in 2008?
  4. Why did the standard of living rise more rapidly in the first generation after World War II than in the second?
  5. Why have starting salaries for students with economics degrees risen sharply of late?
  6. What determines the choice between rail and road transportation?
  7. Why did laptops get much cheaper between 2000 and 2017?
  8. Why did inflation fall in the 2010s?

Why was it profitable for Montgomery Ward to close some of its stores during the Great Depression?

Describe who gets hurt in a recession, and how.
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