6) Consider the following table displaying annual growth rates for nations X, Y,

Question

6) Consider the following table displaying annual growth rates for nations X, Y, and Z, each of which entered 2015 with real per capita GDP equal to $20,000.
                                           Annual Growth Rate (%)

A) Which nation most likely experienced a sizable earthquake in late 2015 that destroyed a significant portion of its stock of capital goods, but was followed by speedy investments in rebuilding the nation's capital stock? What is this nation's per capita real GDP at the end of 2018, rounded to the nearest dollar?

B) What nation most likely adopted policies in 2015 that encouraged a gradual shift in production from capital goods to consumption goods? What is this nations per capita real GDP at the end of 2018, rounded to the nearest dollar?

C) Which nation most likely adopted policies in 2015 that encouraged a quick shift in production from consumption goods to capital goods? What is this nations per capita real GDP at the end of 2018, rounded to the nearest dollar?

Explanation / Answer

A) Country Y is the nation which experienced a a sizable earthquake in late 2015 that destroyed a significant portion of its stock of capital goods . Earthquake in the late 2015 impacted marginally Y's GDP , but it saw strong GDP growth in subsequent years to rebuild the destroyed parts. Thatswhy the country Y seems the most accurate based on high growth in later years. Y's GDP at the end of 2018 will be $2,547.2 per capita.

B). Nation Z, GDP per caita at the end of 2018 will be $23,165.7

C) Nation X, GDP per caita at the end of 2018 will be $23,152.9

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