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Chapter 9: Q.2 (page 209)

A nation's capital goods wear out over time, so a portion of its capital goods become unusable every year. Last year, its residents decided to produce no capital goods. It has experienced no growth in its population or in the amounts of other productive resources during the past year. In addition, the nation's technology and resource productivity have remained unchanged during the past year. Will the nation's economic growth rate for the current year be negative, zero, or positive?

Short Answer

Expert verified

The nation's economic growth rate for the current year be negative.

Step by step solution

01

introduction 

The rate at which the real GDP of a nation develops over time from one year to another is called the economic growth rate.

02

explanation

There would have been a decrease in the worth of accessible capital products in the nation and in this way the real GDP would have diminished. The capital merchandise of the nation wears out with time and the nation has not created any capital products during the earlier year where different elements stay unaltered the financial development rate for the ongoing year will be negative.

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Most popular questions from this chapter

Consider the following table displaying annual growth rates for nations X,Yand Z, each of which entered2017 with real per capita GDP equal to$20,000.

a. Which nation most likely experienced a sizable earthquake in late 2017that 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 of2020, rounded to the nearest dollar?

b. Which nation most likely adopted policies in 2017 that encouraged a gradual shift in production from capital goods to consumption goods? What is this nation's per capita real GDP at the end of 2020, rounded to the nearest dollar?

c. Which nation most likely adopted policies in 2017that encouraged a quick shift in production from consumption goods to capital goods? What is this nation's per capita real GDP at the end ofrole="math" localid="1651525075599" 2020 , rounded to the nearest dollar?

Consider Figure 9-8. According to rule of 70, about how many years would have been required for US per capita real GDP to double if it had remained at the average level observed between 1961 and 1980 ? Between 2001 and 2017 .?

"The largest change is from zero to one." Does this statement have anything to do with relative growth rates in poorer versus richer countries?

In 2018, a nation's population was 10million, its real GDP was role="math" localid="1651518280695" \(1.21billion, and its GDP deflator had a value of 121. By 2019, its population had increased torole="math" localid="1651518397677" 12million, its real GDP had risen to \)1.5billion, and its GDP deflator had a value ofrole="math" localid="1651518422407" 125 . What was the percentage change in per capita real GDP between2018 and 2019 ?

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