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Chapter 22: Q3RQ (page 456)

Suppose a country鈥檚 total output is growing 10 percent per year, but its population is growing 11 percent per year. What will happen to living standards?

  1. Remain the same
  2. Fall
  3. Rise

Short Answer

Expert verified

The correct answer is option (b): Fall.

Step by step solution

01

Living standards

The living standards refer to the level of income, services, and material well-being that are enjoyed by the people in the society. The living standards are important because it shows the quality of life that an individual does enjoy.

02

Explanation for the answer

The living standard will fall if the population growth exceeds the total output of a nation.When there is higher population growth, the country鈥檚 government won鈥檛 be able to produce enough what the society needs, and there occurs an imbalance in the supply and demand of resources.

The increased population growth also leads to an increase in unemployment level and poverty increases in the society. So when population growth exceeds the total output of a nation, it will also result in the decline of the living standard.

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Most popular questions from this chapter

What types of products do DVCs typically export? How do those exports relate to the law of comparative advantage? How do tariffs by IACs reduce DVC's standard of living?

As it relates to the vicious circle of poverty, what is meant by the saying, 鈥淪ome DVCs stay poor because they are poor鈥�? Change the box labels as necessary in Figure 22.3 to explain rapid economic growth in countries such as South Korea and Chile. What factors other than those contained in the figure might contribute to that growth?

Question. Assume that a very tiny and very poor DVC has income per capita of \(300 and total national income of \)3 million. How large is its population? If its population grows by 2 percent in some year while its total income grows by 3 percent, what will be its new income per capita rounded to full dollars? If the population had not grown during the year, what would have been its income per capita?

True or False. Some economists argue that the single best thing that IACs could do for DVCs in terms of economic growth is to eliminate trade barriers between IACs and DVCs.

Question. Compare a hypothetical DVC with a hypothetical IAC. In the DVC, average per capita income is \(500 per year. In the IAC, average per capita income is \)40,000 per year. If both countries have a savings rate of 10 percent per year, the amount of savings per capita in the DVC will be _____ per person per year, while in the IAC, it will be _______ per person per year

a. \(50; \)4000

b. \(5; \)400

c. \(450; \)36,000

d. None of the above
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