Use the following information to answer the next 2 questions: GDP per capita can be shown to equal average labor productivity times the proportion of the population that is employed (GDP/population= Y/L * L/population).
(a) The two factors that determine a nation's standard of living are: 1) the proportion of the population that works, and 2) its output per worker. The United States has an aging population and the proportion of the population that works is expected to decrease. Mexico has a relatively young population and, thus, the proportion of its population that works is expected to increase in the future. Given these circumstances, which of these two factors do you think is more relevant in each country for their standard of living? Explain your answer.
(b) Explain what happens with Econoland's total output (GDP) and its standard of living (as measured by GDP per capita) between 2014 and 2015, if we know the following information. The population of Econoland remains constant at 1,000 persons during both years. The number of employed workers increases from 400 in 2014 to 440 in 2015, but labor productivity, as measured by output per employed worker, decreases from $2,000 to $1,900 during the same time period. Show your derivations.
Use the following information to answer the next 2 questions: GDP per capita can be shown to equal average labor productivity times the proportion of the population that is employed (GDP/population= Y/L * L/population).
(a) The two factors that determine a nation's standard of living are: 1) the proportion of the population that works, and 2) its output per worker. The United States has an aging population and the proportion of the population that works is expected to decrease. Mexico has a relatively young population and, thus, the proportion of its population that works is expected to increase in the future. Given these circumstances, which of these two factors do you think is more relevant in each country for their standard of living? Explain your answer.
(b) Explain what happens with Econoland's total output (GDP) and its standard of living (as measured by GDP per capita) between 2014 and 2015, if we know the following information. The population of Econoland remains constant at 1,000 persons during both years. The number of employed workers increases from 400 in 2014 to 440 in 2015, but labor productivity, as measured by output per employed worker, decreases from $2,000 to $1,900 during the same time period. Show your derivations.
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Consider the following table displaying annual growth rates for nations X, Y, Z, and ZZ, each of which entered 2010 with real per capital GDP equal to $20,000:
| COUNTRY | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|
| X | 7 | 3 | 3 | 4 |
| Y | 4 | 5 | 7 | 9 |
| Z | 5 | 4 | 3 | 2 |
| ZZ | 2 | 2 | 2 | 2 |
A)Which nation was most likely to have suffered a sizable earthquake that destroyed a significant portion of its stock of capital goods? Explain. What is the nations per capita real GDP at the end of 2013? Show your work.
b) Which nation was most likely to have adopted policies in 2010 that encouraged a gradual shift in production from capital goods to consumption goods? Explain. What is this nation's per capita real GDP at the end of 2013? Show your work.
c) Which nation was most likely to have adopted policies in 2010 that encouraged a gradual shift in production from consumption goods to capital goods? Explain. What is this nation's real per capita GDP at the end of 2013? Show your work.
d) Using the growth rates for 2013 for each country, where will real per capita GDP be at the end of 2020 if it were to grow at this rate each year after 2013? Explain. Describe the standard of living in each country as compared to 2010. Show your work.
