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Chapter 18: Q. 4 (page 412)

Consider the estimates that the World Bank has assembled for the following nations:

Rank the nations in order, starting with the one you would expect to have the highest rate of economic growth, other things being equal. Explain your reasoning.

Short Answer

Expert verified

List of nations in order of GDP is explained in the steps.

Increased productivity leads to a higher standard of life and, as a result, a higher GDP. As a result, economic growth per capita increases.

Step by step solution

01

Introduction.

GDP represents the monetary value of a country's final goods and service those that are purchased by the end user produced over a specific period of time (say a quarter or a year). It counts all of the product produced within a country's borders.

02

List of Nations by prior of GDP.

CountryPercentage of Per capita GDPRank
Angola838
1
Togorole="math" localid="1651825502907" 281
2
Bosnia-Herzegovina52
3
Uruguay474
Morocco19
5
03

Reason for the list.

Angola, with a per capita GDP of 838percent, has the highest rate of economic growth. Productivity gains are the primary driver of economic growth per capita. Productivity refers to the ability to produce more goods and services with the same number of inputs.

Increased productivity leads to a higher standard of life and, as a result, a higher GDP. As a result, economic growth per capita increases.

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Most popular questions from this chapter

For each of the following situations, explain which of the policy issues discussed in this chapter relates to the stance the institution has taken.

a. The World Bank offers to make a loan to a company in an impoverished nation at a lower interest rate than the company had been about to agree to pay to borrow the same amount from a group of private banks.

b. The World Bank makes a loan to a company in a developing nation that has not yet received formal approval to operate there, even though the government approval process typically takes 15months.

c. The IMF extends a loan to a developing nation's government, with no preconditions, to enable the government to make already overdue payments on a loan it had previously received from the World Bank.

Why does the fact that population growth has ambiguous effects on real GDP growth complicate the Chinese government's efforts to accomplish its growth objective?

Consider Table 18-1. Based on the basic arithmetic of economic growth, what were the average annual rates of real GDP growth since 1990 for those nations experiencing positive rates of annual growth of per capita real GDP?

Suppose that every 500 billion of dead capital reduces the average rate of growth in worldwide per capita real GDP by 0.1 percentage point. If there is 10 trillion in dead capital in the world, by how many percentage points does the existence of dead capital reduce average worldwide growth of per capita real GDP?

In principle, how could a nation maintain a relatively high rate of economic growth even if it also has a relatively high rate of population growth?
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