ECON102 Chapter Notes - Chapter 30-35: Potential Output, Business Cycle

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coppercod342

11 Dec 2016

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University of Waterloo

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Economics

Course

ECON102

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Maria Viola

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E(cid:272)o(cid:374)o(cid:373)i(cid:272) g(cid:396)o(cid:449)th: the e(cid:454)pa(cid:374)sio(cid:374) of p(cid:396)odu(cid:272)tio(cid:374) possi(cid:271)ilities (cid:894)ou(cid:396) (cid:374)atio(cid:374)"s ppf(cid:895) A rapid pace of economic growth can turn a poor country to a rich one. Slow economic growth, or the absence of this, can allow a nation to fall into devastating poverty. Growth rate: annual percentage change of a variable from its initial level. The equation of growth rate of real gdp: Real gdp growth rate: (real gdp in current year real gdp in previous year) / (real. G(cid:396)o(cid:449)th of real gdp: sho(cid:449)s ho(cid:449) (cid:395)ui(cid:272)kl(cid:455) a (cid:374)atio(cid:374)"s total e(cid:272)o(cid:374)o(cid:373)(cid:455) is e(cid:454)pa(cid:374)di(cid:374)g. This measure is useful for showing potential changes in the balance of economic power among nations, but this information does not tell anything about the standard of living. Standard of living depends on the real gdp per capita (real gdp divided by population) Real gdp per person growth rate equation: Real gdp growth rate: (current year real gdp per capita previous year real gdp per.

Related Questions

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.

burgundysnake361

1. More people in high-income countries than in low-income countries tend to believe that rapid rates of economic growth are not desirable.

Some people in ______-income countries are ______ with certain consequences of rapid economic growth, such as higher standard of living.

-in low-income countries -are concerned with

-in high-income countries -are satisfied with

2. Which of the following best explains what is actually happening to real per capita GDPs of countries?

a. Lower-income countries have not caught up to higher-income countries at all.

b. Lower-income industrial countries are catching up with higher-income industrial countries.

c. Most countries now have similar real per capita GDP levels.

d. Poor countries are generally catching up with rich countries.

Annual Growth Rates of Real GDP Per Capita (in percents)
Ending Year
1929
1933	-8.2
1939	0.2
1940	0.9
1945	3.7	10.3
1950	2.4	4.1	-1.8
1955	2.4	3.6	0.4	2.7
1960	2.2	2.9	0.6	1.7	0.8
1965	2.4	3.0	1.3	2.3	2.1	3.5
1970	2.3	2.9	1.5	2.3	2.2	2.9	2.3
1975	2.3	2.7	1.5	2.2	2.0	2.4	2.0	1.6
1980	2.3	2.7	1.7	2.2	2.1	2.5	2.2	2.1	2.6
1985	2.3	2.6	1.7	2.2	2.2	2.4	2.2	2.1	2.4	2.2
1990	2.3	2.6	1.8	2.2	2.2	2.4	2.2	2.2	2.4	2.2	2.3
1995	2.2	2.5	1.7	2.1	2.1	2.3	2.1	2.0	2.1	1.9	1.8	1.3
2001	2.3	2.5	1.9	2.2	2.2	2.3	2.2	2.2	2.3	2.2	2.2	2.1	2.8
	1929	1940	1945	1950	1955	1960	1965	1970	1975	1980	1985	1990	1995
Starting Year

Source: Economic Report of the President, various years.

This table keeps changes in real GDP from being overstated by adjusting for

Select one:

a. productivity.

b. inflation.

c. standard of living.

d. population growth.

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Per Capita GDP
Luxembourg	$33,609
United States	$33,586
Switzerland	$27,126
Japan	$23,311
Iceland	$23,230

Economists use numbers such as those in the table as a measure of

Select one:

a. net exports.

b. total dollar value of all final goods and services.

c. national income.

d. standard of living.

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Per Capita GDP
Luxembourg	$33,609
United States	$33,586
Switzerland	$27,126
Japan	$23,311
Iceland	$23,230

The numbers in this table were calculated by

Select one:

a. multiplying GDP by total population.

b. dividing GDP by total population.

c. adding the dollar value of all final goods and services produced in the nation.

d. subtracting net exports from GDP.

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A key gauge of future U.S. economic activity declined 0.5% last month, as the Sept. 11 terrorist attacks in New York and Washington weakened an already troubled economy.

The Conference Board said Monday its index of leading economic indicators fell to 109.2 in September,...the largest one-month decline since January 1996.... The index indicates where the overall U.S. economy is headed in the next three to six months....

The economy had been struggling for several months before the Sept. 11 attacks. Many economists have said they believe that a recession is unavoidable with the new uncertainties raised by the disaster.

Source: âLeading Indicators Decline,â USAToday.com, October 22, 2001.

The passage discusses a business fluctuation influenced by

Select one:

a. external shock.

b. monetary factors.

c. innovation.

d. capital expenditures.

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For all the recent talk of cutting taxes, Congress rarely cuts them when the economy is growing robustly, as it is now, and unemployment is low. The worry among economists is that the extra money in peopleâs pockets may make an already strong economy too strong, finally stoking inflation after a long period of relatively stable prices.

Source: The New York Times, July 14, 1999.

The passage describes rising inflation as a possible result of

Select one:

a. a booming economy.

b. rising unemployment.

c. tax cuts.

d. a prolonged period of stable prices.

ECON102 Chapter Notes - Chapter 30-35: Potential Output, Business Cycle

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