1) If real GDP per capita in the United States is $8,000, what will real GDP per
ID: 1208670 • Letter: 1
Question
1) If real GDP per capita in the United States is $8,000, what will real GDP per capita in the United States be after 5 years if real GDP per capita grows at an annual rate of 3.2%?
2) Sweden has a population of 9.05 million, and a GDP of $3.85 billion. Ireland has a population of 4.21 million, and a GDP of $2.23 billion. Which country has a higher standard of living, and why?
3) Refer to figure above. Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from point ____ to point ____.
4) Refer to figure above. Technological change is illustrated in the per-worker production function in the figure above by a movement from point ____ to point ____ (there are multiple correct answers; you only need to provide one).
5) Refer to figure above. Within a country, the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from point ____ to point ____.
Explanation / Answer
1) Real GDP per capita in the U.S. = $8,000
Annual growth rate = 3.2%
Real GDP per capita after 5 years = $8,000(1 + 3.2%)^5
Real GDP per capita after 5 years = $8,000(1.032)^5
Real GDP per capita after 5 years = $8,000*1.1705
Real GDP per capita after 5 years = $9,.364.
2) Sweden:
Population = 9.05 million
GDP = $3.86 bullion
GDP per capita = 3,860,000,000 / 9,050,000
GDP per capita = $426.51
Ireland:
Population = 4.21 million
GDP = $2.23 billion
GDP per capita = $2,230,000,000 / 4,210,000
GDP per capita = $529.69.
Ireland has a higher standard of living as its GDP per capita is higher than that of Sweden.
3) Refer to figure above. Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from point A to point C.
4) Refer to figure above. Technological change is illustrated in the per-worker production function in the figure above by a movement from point B to point C (there are multiple correct answers; you only need to provide one).
5) Refer to figure above. Within a country, the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from point C to point A.
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