Suppose economies A and B have the same initial level 7. of GDP per capita at $1
ID: 1128403 • Letter: S
Question
Suppose economies A and B have the same initial level 7. of GDP per capita at $15,000, and each economy begins with a constant growth rate of 1% per year. (Neither country has good institutions for economic growth at first.) Then Country A enters an era of political stability, establishes property rights, and installs incentives for entrepreneurship. Country A's economic growth rate consequently improves to 5%. Assuming population growth rates remain unaffected, how much longer will ia take Country 8 to double its per capita GDP level compared to Country A? A. 56 yearsC 70 years B. 14 years nd to D. 28 years 8. Which statement is NOT true about net exports? A. U.S. imports cannot contribute to the GDP of other nations B. A nation that imports more than it exports has negative net exports. C. The smallest component of U.S. GDP is net exports. D. The U.S has had negative net exports for every quarter since the third quarter of 1980 9. What is the best definition of a recession? A significant, widespread decline in real income and employment B. period that has a persistent low employment rate C period that follows two consecutive quarters of declines in the level of real GDP D. period that follows a stock market crash 10. A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases? A. The opportunity cost of producing soccer bails falls, so the supply curve of soccer balls shifts left B. The opportunity cost of producing soccer bails falls, so the supply curve of soccer balls shifts right. C The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls shifts left. D. The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls shifts right. 11. A nation's real per capita GDP is $7,788 in 2004 and $8,080 in 2005. What is the growth rate of real GDP per capita? A. 35% B. 3.75% C. 3.61% 0,275%Explanation / Answer
Q7)
Growth rates of A & B initially are 1% then country A which experiences political stability have growth rate of 5% therafter and that of coutry A remains at 1%
we will use 72 rule here states if a*b =72 then if we have invested capital at a% of returns then it will take b years to double the capital.
hence for country A it would take b =72/1 that is approximately equal to 70 years where as country B would take b = 72/5 = approx. 14
There fore answer is = 70-14 =56 years is the answer
Q9)
Recession is in simple terms that country has negative growth rate for atleast 2 consecutive quarters in terms of GDP, employment etc.
Hence in our case Option C fits in best.
Q10)
If the Prices of Vollyball increase and no change in the price of soccer balls then Opportunity cost linked with producing soccer ball falls and supply gets reduced hence shifts to left(contraction of supply curve) hence optian A
Q11)
growth rate of real gdp = (8080-7788)/7788 *100 = 3.75%
Option B