card. (1) In the 20th century, movements in output due to recessions and recover
ID: 1151317 • Letter: C
Question
card. (1) In the 20th century, movements in output due to recessions and recoveries domi- nate the movement caused by long-run growth. (a) True. (2) In theory, a lower fertility rate and an aging population will cause saving rate to (a) True. (b) False (3) Hifner and Koske (2010) find that increases in house prices and stocks prices lead to higher saving rates in countries such as Ehe United States and the U Kingdom (a) True. (b) False. (4) The growth rate of real GDP per capita is a good indicator of improving living standards. (a) True. (b) False. (5) Japan's high labor force participation rate can explain why in 1997 Japan's GDP per capita was higher than the GDP per capita in France but Japan's GDP per worker was much lower than the GDP per worker in France. (a) True, (b) False.Explanation / Answer
1.
B.False
The 20th century is marked by globalization, international trade and service sector growth apart from the industrial development in different parts of the world. So, it is the long term growth that dominates the recessionary impacts in some parts of the world including the USA. Besides, the recession delays the movement, so it cannot dominate the long term growth trend.
2.
B. False
Lower fertility rates means population is growing slowly and existing population has the higher average age. It will attract higher expenditure on health care and other expenses. Besides, savings will also come down as family is also not growing.
3.
B.False
Higher prices of the properties and stocks in the market are due to the high demand and it has happened due to the higher level of consumption and investment spending. It puts downward pressure upon the savings.
4.
A.True
An increase in real GDP per capita, means economy is doing well. New jobs are being created, aggregate demand is increasing and supply is also increasing to cater the demand. It shows that people are getting better with the growth of the economy. So, living standard improves. Though, it does not ensure the equality in the income distribution of the people.
5.
B.False
It is explained by the productivity level of the employees. A higher productivity level in France, will cause higher GDP per worker, than that of the Japan, even if the GDP per capita is relatively higher in Japan.
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