Consider the following table displaying annual growth rates for nations X, Y, Z,
ID: 1201697 • Letter: C
Question
Consider the following table displaying annual growth rates for nations X, Y, Z, and ZZ, each of which entered 2010 with real per capital GDP equal to $20,000:
A)Which nation was most likely to have suffered a sizable earthquake that destroyed a significant portion of its stock of capital goods? Explain. What is the nations per capita real GDP at the end of 2013? Show your work.
b) Which nation was most likely to have adopted policies in 2010 that encouraged a gradual shift in production from capital goods to consumption goods? Explain. What is this nation's per capita real GDP at the end of 2013? Show your work.
c) Which nation was most likely to have adopted policies in 2010 that encouraged a gradual shift in production from consumption goods to capital goods? Explain. What is this nation's real per capita GDP at the end of 2013? Show your work.
d) Using the growth rates for 2013 for each country, where will real per capita GDP be at the end of 2020 if it were to grow at this rate each year after 2013? Explain. Describe the standard of living in each country as compared to 2010. Show your work.
Annual Growth Rates (%) COUNTRY 2010 2011 2012 2013 X 7 3 3 4 Y 4 5 7 9 Z 5 4 3 2 ZZ 2 2 2 2Explanation / Answer
1. Nation A seems to have suffered a sizable earthquake that destroyed a significant stock of capital goods in 2010 because growth rate of this nation has fallen by 3% which is highest among all nations. At the end of 2013, it's per capita real GDP is $22066.7 .
2. Nation Z because it has just increased its production of consumer goods. Its per capita real GDP is $21852.48.
3. Nation Y because it has increased its production of capital goods that will also result in increased production of consumption goods. Its per capita real income is $24492.3 .
4. Per capita real GDP for Nation X , in 2020 would be = 22066.7 * (1.04)7 = $29038.27
similarly, for Nation Y = $44772.88
for Nation Z = $ 25101.63
For nation ZZ = $24379.88
Living standard in each country has improved as compared to 2010.
Nation Y happens to be the richest of all.
country 2010 2011 2012 2013 X 20000 20000 * (1.03) = 20600 21218 22066.7 Y 20000 21000 22470 24492.3 Z 20000 20800 21424 21852.48 ZZ 20000 20400 20808 21224.16