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Chrome File Edit View History Bookmarks People Window Help A TAT U.S. Sun 7:55 PM e e e MM Inbox (4)- X Job Listing x Employee x C Topic: Rec X Google fan X DEco2013 x Q Chap 15 P x Q Macroecon x QChapter 7 x Problem se X e B. positive X Sarah C ezto mheducation.com hm.tpx Sarah Hou Spring 2016: Principles of Macroeconomics ECONOMICS 8:30 AM 10:10 AM Shopp Problem set 3: Savings Investment instructions l help Question 21 (of 27 Save & Exit Submit value 0.37 points Real GDP per person in Northland is $30,000, while real GDP in Southland is $10,000, However, Northland's real GDP per person is growing at1percent per year, and Southland's real GDP per person is growing at 3 percent per year. these growth rates persist indefinitely, then: O Northland's real GDP per person will decline until it equals Southland's. O Northland's real GDP per person will always be between 1 and 2 percent greater than Southland's O Southland's real GDP per person will always be exactly 2 percent less than Northland's Southland's real GDP per person will eventually be greater than Northland's References Learning Objective: 07-01 Multiple Choice Difficulty: 02 Medium Show All café Taiwan.jpg café en France. jpeg u ch05-practice rtf In Class-e03h1majors.xlsx

Explanation / Answer

Solution:

The correct answer to above question is that Northland's real GDP per person will always be between 1 & 2 % greater than Southlands.The answer has been derived with the help of following calculations:

Northland Southland

Growth-rate: 1% 3%

GDP $30,000 $10,000

Year 1 30,000(1+0.01)^1 10,000(1+0.03)^1

Year 2 30,000(1+0.01)^2 10,000(1+0.03)^2

In dis way by comparing the GDP's for different years ,we came to a conclusion that Northlands GDP was always found to be 1 to 2 % greater than southland GDP.

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