🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
Economics
1
answer
0
watching
158
views

Assume the following problem is based on 2010 economic data for the following countries associated with the North American Free Trade Agreement (NAFTA):

United States

Mexico

Real GDP per capita $44,000

Real GDP per Capita $11,000

a. What is the definition and the formula for the rule of 70?
b. Assuming that real GDP per capita in Mexico grows at the rate of 5 percent per year, how long will it take for Mexico's economy to double?
c. How many years will it take for Mexico's economy to reach the level of the United States real GDP per capita in 2010?
d. Using economic growth theory, what has helped Developing Countries (DVCs) like the Asian Tigers of Singapore, South Korea, Thailand, Hong Kong, and Japan transform into Industrially Advanced Countries (IACs)? e. Based on our discussion in class, Superstar Economist Alan Greenspan classified the large transition economies of India and China as Elephants. Explain the meaning of this phrase

Watch
1
answer
0
watching
158
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Kritika Krishnakumar
Kritika KrishnakumarLv10
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

The empirical fit of the production model: The table below reports per capita GDP and capital per person in the year 2010 for 10 countries. Your task is to fill in the missing columns of the table.

(a) Given the values in columns 1 and 2, fill in columns 3 and 4. That is, compute per capita GDP and capital per person relative to the U.S. values.

(b) In columns 5, use the production model(with a capital exponent of 1/3) to compute predicted per capita GDP for each country relative to the United States, assuming there are no TFP differences.

(c) In Column 6, compute the level of TFP for each country that is needed to match up the model and the data.

(d) Comment on the general results you find.

Country

In 2005 dollars

Relative to the U.S. values (U.S. = 1)

Capital

per

person

Per

Capita

GDP

Capital

per

person

Per

capita

GDP

Predicted

y*

Implies

TFP to

match

data

Unites States

124,162

41.365

1,000

1,000

1,000

1,000

Canada

110,132

37,104

        

France

100,668

31,299

        

Hong Kong

136,360

38,685

        

South Korea

101,506

26,609

        

Indonesia

9,173

3,966

        

Argentina

29390

12,340

        

Mexico

35,887

11,939

        

Kenya

2,125

1,247

        

Ethiopia

977

680

        

1. Consider an economy that produces oranges and boomerangs. The prices and quantities of these goods in two different years are reported in the table below. Fill in the missing entries

2016 2017 % change of 2016-2017
quantity of oranges 100 105 ?
quantity of boomerangs 20 22 ?
price of oranges (dollars) 1 1.10 ?
price of bommerangs (dollars 3 3.10 ?
Nominal GDP ? ? ?
Real GDP in 2016 prices ? ? ?
Real GDP in 2017 prices ? ? ?
Real GDP in chained prices ? ? ?

2. Consider the economy from the above problem 1.^ Calculate the inflation rate for the 2016–2017 period using the GDP
deflator based on the Laspeyres, Paasche, and chain-weighted indexes of GDP.

3. Indian GDP in 2010 was 78.9 trillion rupees, while U.S. GDP was $14.5 trillion. The exchange rate in 2010 was 45.7 rupees per dollar. India turns out to have lower prices than the United States (this is true more generally for poor countries): the price level in India (converted to dollars) divided by the price level in the United States was 0.368 in 2010.
(a) What is the ratio of Indian GDP to U.S. GDP if we don’t take into account the differences in relative prices and simply use the exchange rate to make the conversion?
(b) What is the ratio of real GDP in India to real GDP in the United States in common prices?
(c) Why are these two numbers different?

Topic:
How would you explain the finding that people in high-income economies seem happier than people in low-income economies, but, over time, people in high-income economies do not seem to be any happier even if their country grows richer? Briefly discuss.

Optional Reading:

Income and Happiness

The Declaration of Independence in 1776 identified “certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness.” This did not guarantee happiness but did establish the pursuit of happiness as an “unalienable” right, meaning that right cannot be taken away, given away, or sold. Eighteenth century philosopher and social reformer Jeremy Bentham argued that government policy should promote the greatest happiness for the greatest number of people.

Many people today apparently agree. In recent polls, 77 percent of Australians and 81 percent of Brits believed that a government's prime objective should be promoting the greatest happiness rather than the greatest wealth. The United Nations in 2007 sponsored an international conference on “Happiness and Public Policy.” Thailand now compiles a monthly Gross Domestic Happiness Index. Even China has joined in the fun reporting a happiness index based on polling results about living conditions, income, the environment, social welfare, and employment. Australia, Canada, and the United Kingdom are also developing happiness indexes.

Economists have long shied away from asking people how they feel, preferring instead to observe their behavior. But more now see some value in asking questions. In the most extensive of polls, the Gallup organization asked people in 130 countries: “How satisfied are you with your life, on a scale of zero to ten?” The results, reported in 2007, are not surprising. Most people in the high income areas, such as the United States, Europe, and Japan, said they are happy. Most people in the poor areas, especially in Africa, said they are not. Also, within a given country, income and happiness are positively related. After evaluating all the results of the Gallup world poll, Angus Deaton of Princeton concluded: “The very strong international relationship between per capita GDP and life satisfaction suggests that, on average, people have a good idea of how income, or the lack of it, affects their lives.” 8

So these results are no surprise. What does puzzle economists is that other surveys suggest that in affluent countries people do not seem any happier over time even though each generation became richer than the last. For example, in the United States, the proportion of people who say they are happy has stayed about the same despite 60 years of economic growth. In Japan, happiness responses actually declined despite a substantial increase in real income over the last 50 years.

Here are two possible explanations. First, people begin taking for granted those luxuries they most desired. For example, two generations ago color TVs, automobiles, and major appliances were luxuries, but now they are must-items for most households. Computers and flat screen HDTVs will soon move from luxuries to necessities. As each generation attains a higher standard of living, people become less sensitive to the benefits, they take them for granted, and thus they say they are no happier.

Second, research suggests that what matters is not just the absolute level of income but income relative other people in the reference group. Imagine you have a choice between (1) earning $50,000 a year while others in your reference group make $25,000 or (2) earning $100,000 a year while others make $250,000 (suppose, too, that prices remain the same, so $100,000 is double the real income of $50,000). Which would you prefer? Studies show that when people face this hypothetical choice, most pick the $50,000 option. That is, they prefer to make more than others even if that means a lower real income. Thus, if all incomes rise on average over time, this does not affect that aspect of happiness linked to one’s relative standing. As the social critic H. L. Mencken long ago observed, "A wealthy man is one who earns $100 a year more than his wife's sister's husband."

SOURCES: Daniel Gilbert, Stumbling On Happiness, (New York: Knopf, 2006); Marina Kamenev, “Rating Countries for the Happiness Factor,” Business Week, 11 October 2006; Angus Deaton, “Income, Aging, Health, and Wellbeing Around the World: Evidence from the Gallup World Poll,” Princeton Working Paper, (August 2007); and “Where Money Seems to Talk,” Economist, 12 July 200

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in