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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:

Annual Growth Rates (%)
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.

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Raushan Raj
Raushan RajLv8
28 Sep 2019

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Related questions

*********The best answer plus points will go to the person who answers the questions correctly^^^^^ Please provide an explanation to answers..

Which one of the following statements is correct?

A. A. Most production possibilities curves illustrate decreasing marginal opportunity costs.

B. B. Relative scarcity is no longer a central idea in economics because we are in an age of abundance.

C. C. The production possibilities curve shows society's preferences for consumer goods relative to capital goods.

D. D. The central concept underlying the production possibilities curve is that of limited resources.


A government subsidy to the producers of a product:

A. A. reduces product supply.

B. B. increases product demand

C. C/ increases product supply.

D. D/ reduces product demand.


If the price of DVD players decreases, we can expect that the demand for DVDs will:

a. A. increase.

b. B. be unaffected.

c. C/ shift left.

decD. Decrease


Which of the following is assumed in constructing a typical production possibilities curve?

a. the economy is engaging in international trade.

b. production technology is fixed.

c. the economy is using its resources inefficiently.

d. resources are perfectly shiftable (equally efficient) among alternative uses.


A system of private property rights

A. A.enhances economic growth by creating incentives to the Fed to maintain stable prices.

B. B. enhances economic growth by increasing the probability that a person can gain from making investments today.

C. C. retards economic growth by serving the interests of the wealthy only.

D. D. retards economic growth by limiting the options of people who own nothing.


An increase in growth rates will cause the production possibilities curve to

a. A. shift inward.

b. B. become steeper.

c. C. become flatter.

D. d. shift outward.

If population growth is greater than the growth of real output,

A. A. real per capita Gross Domestic Product (GDP) growth will be less than the growth of real Gross Domestic Product (GDP).

B. B. the production possibilities curve is shifting to the left.

C. C. real per capita Gross Domestic Product (GDP) growth will be greater than the growth of real Gross Domestic Product (GDP).

D. D. real per capita Gross Domestic Product (GDP) and real Gross Domestic Product (GDP) will be growing at the same rate.


In general, economists have found that as nations' levels of per capita real Gross Domestic Product (GDP) increase,

A. A. the rate of population growth declines.

B. B. the rate of population growth experiences dramatic increases.

C. C. there is no effect on population growth.

D. D. the rate of population growth increases at the same rate as economic growth.




2.) In a simple economy (assume there are no taxes; thus, Y is disposable income), the consumption is C=50+0.80 Y. The current level of real GDP is $3000.

At this level of real GDP, consumption will be $___, and savings will be $___. If GDP were to increase by $1000, consumption would increase by $___. (Round off response to nearest dollar.)

At a real GDP level of $3000, the average propensity to conumer is $___, and the average propensity to save is ___. (Round off response to nearest dollar.)

11.) In the short run, if the economy has a recessionary gap, an increased government deficit resulting from higher government spending or lower taxes is most likely to :

a) increase aggregate demand, which will move the economy toward full employment real GDP

b) have no effect on aggregate demand or real GDP after direct and indirect offsets are counted

c) increase aggregate demand, raising prices and creatring an inflationary gap

d) decrease aggregate demand, reducing prices and increasin the recessionary gap

14.) The Federal reserve purchases $9 million in uS Treasury bonds from a bond dealer, and the dealer's bank credits the dealer's account. The required reserve ratio is 17 percent , and the bank typically lends any excess reserves immediately. Assuming that no currency leakage occurs, calculate how much much will the bank be able to lend to its customers following the fed's purchase. $ __ million. (round off to 2 decimal points)

18.) According to the quantity theory of money, the prices, a -3% change in the money supply, holding other variables constant leads to a

a) -3% changee in real GDP

b) -3% change in the interest rate

c) -3% change in the price level

d) a greater than -3% in real GDP

24. Over the course of a year, a nation tracked its foreign transactions and arrived at the following amounts:

Merchandise exports 500

service exports 75

net unilateral transfers 10

domestic assets abraod (capital outflows) -200

foreign assets at home (Capital inflows) 300

changes in official reserves -35

merchandise imports 600

service imports 50

This nations' blance of trade is ______

Its current account balance is ______

The nation's capital account balance is _____

27. Major discoveries of the highest-quality dia-monds ever found occur in Russia andCentralAsia, causing a significant decline in purchases ofSouth African diamonds. Moreover, assume a floating exchange rate.

Describe how the market for the rand is impacted by this event. Will demand shift to the left? Will supply remain the same? Or will supply change?

1. Fiscal policy attempts to affect the level of overall spendingin the economy by changes in:
A) the interest rate.
B) the money supply.
C) banking regulations.
D) taxes and spending.


2. Economists have identified several consecutive months of fallingemployment and forecasts for the next few months are for more ofthe same. At what point in the business cycle is the economyapparently located?
A) recession
B) expansion
C) business cycle peak
D) business cycle trough


3. The onset of the Great Depression:
A) was not a shock to anyone since most economists predicted the“roaring 20s” were bound to end in disaster.
B) created a disagreement between the Hoover administration andconventional economists because Hoover wanted the government tointervene much more quickly than most others.
C) came as a considerable shock to the conventional wisdom ofeconomics at that time and opened the door for critiques ofmainstream thought by economists like JM Keynes.
D) was in 1918 at the end of World War I.


4. When economists measure economic growth, they often use:
A) the inflation rate.
B) the unemployment rate.
C) nominal GDP.
D) real GDP.


5. In a typical business cycle, the business cycle peak isimmediately followed by the:
A) recession.
B) business cycle trough.
C) expansion.
D) depression.


6. Suppose an economy experiences rising total output accompaniedby increasing employment, this is generally known as:
A) stagflation.
B) recession.
C) inflation.
D) expansion.


7. Controlling interest rates is an example of:
A) fiscal policy.
B) tax policy.
C) monetary policy.
D) exchange rate policy.


8. The alternation between recessions and expansions is known asthe:
A) unemployment rate.
B) long-run economic growth.
C) business cycle.
D) macroeconomy.


9. A recession in America is typically associated with:
A) a falling unemployment rate.
B) a decrease in the number of people living in poverty.
C) a decrease in the percentage of Americans with healthinsurance.
D) an increase in corporate profits.


10. The purpose of macroeconomic policy is to:
A) bring unemployment closer to the natural rate.
B) reduce the severity of recessions.
C) rein in excessively strong expansions.
D) bring unemployment closer to the natural rate and to reduce theseverity of recessions.


11. The trade balance is the difference between the value ofthe:
A) trade deficit and the budget deficit.
B) goods and services that one country sells to other countries andthe value of the goods and services it buys in return.
C) exchange rates of two countries that are engaged ininternational trade.
D) national debt and the foreign debt.


12. Increasing the total amount of available productive resourcesis the focus of __________.
A) macroeconomics
B) fiscal policy
C) monetary policy
D) microeconomics


13. The point on a business cycle when real GDP stops rising andbegins falling is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.


14. During a recession, one will often observe:
A) aggregate output rising.
B) unemployment rates will be increasing while aggregate output isfalling.
C) employment rates will be rising.
D) zero unemployment rates.


15. Monetary policy involves:
A) changes in government spending.
B) changes in government tax receipts.
C) changes in the quantity of money.
D) changes in tax rates.


16. The trough of the business cycle:
A) comes right after the expansion phase.
B) comes before the recession phase.
C) is a temporary maximum level of real GDP.
D) is a temporary minimum level of real GDP.


17. Which one of the following statements about the U.S. economy isnot accurate?
A) Since the Second World War, aggregate output grew at a ratelower than the average annual growth rate of population.
B) Since the Second World War, aggregate output grew at a ratehigher than the average annual growth rate of population.
C) Since the Second World War, macroeconomic policy has helped makethe economy more stable.
D) Long-run growth per capita is the key to higher wages and arising standard of living.


18. An economic recovery is all of the following except:
A) economic growth of a sustained nature.
B) a short-run increase in aggregate production in aneconomy.
C) a time of increasing employment.
D) the end of the business cycle.


19. Which of the following would NOT be classified as amacroeconomic question?
A) How many people are employed in the economy as a whole?
B) What determines the overall level of prices in the economy as awhole?
C) What determines the overall trade in goods, services, andfinancial assets between the United States and the rest of theworld?
D) What determines the cost to a university or college of offeringa new course?


20. Which of the following statements regarding price level orinflation is correct?
A) Supply and demand can not explain why a particular good orservice becomes more expensive relative to other goods andservices.
B) Inflation affects only the more advanced countries whereas lessadvanced countries face deflation.
C) Prices of most goods and services remained stable during thegreat depression.
D) In general, when the economy is in recession and jobs are hardto find, inflation tends to fall.


21. If wages grew at a 5% rate last year and average prices grew ata 3% rate, then the average worker is:
A) better off.
B) worse off.
C) no better or worse off.
D) unaffected.


22. In an open economy:
A) the exchange rate is determined by the government.
B) specialization in activities with a comparative advantage is notpossible.
C) trade is only beneficial to the relatively larger economy.
D) there is trade in goods, services, or assets with othercountries.


23. Changes in government spending and taxes in an effort to changeoverall spending in an economy is:
A) fiscal policy.
B) monetary policy.
C) investment.
D) the stock market.


24. If an economy is open, this means that:
A) anyone can immigrate to the country.
B) trading with other countries makes up a portion of itseconomy.
C) it does not trade with other countries.
D) it will experience a drop in its real GDP.


25. Inflation is a situation where:
A) the average price level falls.
B) the average price level increases.
C) the average price level becomes negative.
D) the real price level falls.


26. The topics studied in macroeconomics include:
A) the price of a motorcycle.
B) the wages of engineers.
C) the average price level in the economy.
D) how much ice cream consumers buy.


27. A period of rising real GDP is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.


28. The modern tools of macroeconomic policy are:
A) tax policy and antitrust policy.
B) fiscal policy and monetary policy.
C) monetary policy and exchange rate policy.
D) capital policy and labor policy.


29. A “rubber necking” traffic jam is an example of:
A) microeconomics in action.
B) individual behavior that has a large aggregate impact.
C) the paradox of thrift.
D) an outcome smaller than the sum of its parts.


30. The most painful consequence of a recession is:
A) rising unemployment.
B) increasing inflation.
C) increasing aggregate output.
D) higher interest rates.


31. Per capita economic growth is:
A) economic growth per unit of capital.
B) economic growth per person.
C) economic expansion over the business cycle.
D) sustained increase in aggregate output.


32. Keynesian economics stressed:
A) total spending.
B) the self-regulating power of free markets.
C) the long run.
D) that the Depression should run its course to bring down the highcost of living.


33. When an economy's overall production grows faster than itspopulation, this is referred to as:
A) long-run growth per capita.
B) an increase in nominal GDP.
C) deflation.
D) the paradox of thrift.


34. Fiscal policy attempts to affect the overall level of spendingin the economy through:
A) changes in the inflation rate.
B) changes in the quantity of money or the interest rate.
C) changes in tax policy or government spending.
D) discretionary regulation of profits and wages.


35. With regard to the aggregate price level, economists generallybelieve:
A) price stability is a desirable goal.
B) inflation is worse than deflation.
C) deflation is worse than inflation.
D) inflation actually benefits most retired people.


36. Recessions are periods when:
A) output rises.
B) the aggregate price level rises.
C) the unemployment rate is falling.
D) output and employment are falling.


37. Monetary policy attempts to affect the overall level ofspending in the economy by changes in:
A) taxes.
B) taxes and spending.
C) taxes and interest rates.
D) interest rates and the quantity of money.


38. The basic difference between an economic recession and economicdepression is that:
A) the latter is a shorter economic downturn than the former.
B) during recessions output falls faster than duringdepressions.
C) during depressions employment falls faster than duringrecessions.
D) the former is a longer economic downturn than the latter.


39. The central mission of modern macroeconomics is to prevent_____ from happening again.
A) recessions
B) inflation
C) deflation
D) anything like the Great Depression


40. Fiscal policy refers to:
A) the control of interest rates.
B) the control of government spending and taxations.
C) the control of the quantity of money.
D) the control of interest rates and of government spending.


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