(1) When comparing the standard of living across countries, we need to use real
ID: 1150874 • Letter: #
Question
(1) When comparing the standard of living across countries, we need to use real GDP per capita adjusted by nominal exchange rates (a) True. (b) False. (2) The Solow growth model is able to explain the "conditional convergence" phe- lata because the theory predicts that only countries nomenon observed in the d with similar steady states will exhibit convergence. (a) True. (b) False. (3) One potential explanation for the secular decline in saving rates in the G7 coun- tries is that, compared to the 1970s and 1980s, these countries experience lower and more stable inflation after the early 1990s. (a) True. (b) False. (4) Countries with lower saving rates and higher population growth rates tend to be richer in the long-run. (a) True. (b) False. (5) Canada Pension Plan is changing gradually from a "pay-as-you-go" plan to a hybrid structure (i.e., a mix of "fully funded" and "pay-as-you-go" plan). This change will reduce Canada's capital stock in the long-run. (a) True. (b) False.Explanation / Answer
1) Real GDP per capita is better measure than Nominal GDP as it removes the effect of inflation and also the conversions are required between currencies in terms of exchange rate to which measures like nominal exchange rate or PPP rate should be used. Hence it is true.
True.
2) The solow model states that two countries, irrespective of their initial state, if are having every parameters same (saving rates, poulation growth rates, rates of technical progress etc.) then they must exhibit similar level of per capita.
True.
3) G7 countries had stable and lower level of inflation since mid 1990 not after the 1990. False
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.