Question

Imagine the following goal of Lenin/Stalin at the beginning of the Soviet regime in Russia: to overtake (i.e. equal) and surpass the world’s industrialized economies in terms of GDP per capita. To achieve this goal, the main instrument of control is the fraction of national production that is devoted to building the nation’s productive capacity: new machin es, factories, transportation equipment, and roads . That is, the main instrument to achieve this goal is the fraction of GDP devote d to investment. The rest of national production is used for consumption, i.e. to produce consumer items like clothing and food. The country begins with relatively little capital, being mostly rural and non - industrialized. Assume each of the following: GDP per capita starts in USSR at $300/year. The world’s industrialized economies start with GDP per capita of $5000/year. Po pulation growth rates are 2% everywhere in the world. All capital depreciates at 8% per year. a. At what average annual rate will income per capita in the USSR have to grow in order to overtake (i.e. to equal) the industrialized nations’ income per capita in exactly 30 years? Assume the industrialized nations’ income per capita is growing at 2% per year. b. If the USSR sustains the growth rate of part a., how long after it has overtaken the industrialized nations’ GDP per capita will it take for it to atta in double the industrialized nations’ GDP per capita? Again, assume the industrialized nations’ GDP per capita is growing at 2% per year. For parts c. - e., use the Harrod - Domar model , and assume that 1 ruble of capital produces 0.5 rubles of output (i . e. A =0.5). Also, assume inputs are used more efficiently in the industrialized countries, so that A=0.6 there. c. What fraction of national output mu st the USSR devote to building new capital goods in order to attain the growth rate of part a.? What fraction would be left for consumer items? [Hint: another word for the fraction of output devoted to building new capital goods is the investment rate, i.e. the ratio I t /Y t . And, remember that savings equals investment , so the investment rate equals the savings rate . ] d. A t what rate are the industrialized countries saving if they are growing at 2% per year? e. What would you calculate the ratio of consumption per capita in the USSR to consumption per capita in the industrialized countries when the USSR overtakes the industrialized countries (i.e. when GDP per capita is equal)? Assume the savings rates of parts c. & d. What would the ratio be when the USSR reaches double the industrialized nations’ GDP per capita?

Answer #1

Use the H-augmented Solow model to determine the a)
instantaneous impact on GDP per capita, b) instantaneous impact on
consumption per capita, c) long-run impact on GDP per capita, d)
long-run impact on consumption per capita, e) impact on long-run
GDP per capita growth rate, and f) impact on long-run GDP growth
rate of a permanent and instantaneous increase in the fraction of
national resources devoted to investment in human capital, sh.
Assume the country begins at its steady state...

Question 27 (1 point)
Which of the following statements is true?
a
The standard of living in a country can be estimated using
Real GDP per capita (per person)
b
By definition, Real GDP per capita = Real GDP / Population.
c
A key principle of economic growth is that in order to raise the
standard of living of a country over time, an economy must devote
some of its current output to increasing future
output. This requires both saving...

4.?Answer True or False for each of the following. 4 pts
each
The savings rate of American households has been higher
recently than in the late 1990s.
In some less developed countries GDP grows more slowly than
population does.
Net domestic investment has been greater than net national
savings for some time.
?Robert Solow identified capital as the major source of
economic growth.
?Malthus says there is a tendency for population to rise
faster than production, causing famine.
?Most economists...

Economists in Fundlandia, a closed economy, have collected the
following information about GDP and public savings in their
country:
Y = 1000
G = 100
T = 100
They further estimate that national savings and investment are
governed by the following expressions:
S = 150 + 50*r
I = 600 - 100*r
Where r is the country's real interest rate in % terms (thus if you
find r = 5, then r is 5%).
Problem Set #2 - Part II...

1. Consider an economy that produces and consumes bread and
automobiles. In the table below are data for two different
years:
Year 2010
Year 2025
Price of an automobile
$50,000
$60,000
Price of a loaf of bread
$10
$20
Number of automobiles produced
100
120
Number of loaves of bread produced
500,000
400,000
Using the year 2010 as the base year, compute the following:
nominal GDP, implicit price deflator and the CPI.
2.
Assume that GDP (Y) is 5,000. Consumption...

1) The Central Bank of Thailand has decided that universal home
ownership is a worthwhile goal for the country. To encourage new
home construction and purchase, the CBT expands the Thai money
supply significantly, thus pushing down interest rates on
construction loans and mortgages.
Assuming that CBT is operating under a floating exchange rate
system, what happens to the value of the Thai currency - i.e., bhat
- and its trade balance following the expansion of Thailand’s money
supply?
Select...

Janet's life can be split into 3 periods.
At t=1, her after-tax income is Y1= 100,000
At t=2, Y2 = 140,000
At t=3, Y3= 0
Assume the market interest rate and the utility discount rate
are equal to zero, which implies that savings earn no interest in
the city that she lives in and she is relatively patient. In
addition, Janet is not very risk averse so she has utility U(Ct) =
ln(Ct). Given her utility, the marginal value of...

America and Country X have the same levels of consumption,
investment, and government
purchases, but Country X sells twice as many exports as buys
twice as many imports
as America. Which country must have a larger GDP?
America
Country X
The GDP of America must equal the GDP of country B
The answer depends on whether America has positive or negative
net exports
A multiple-choice question with one possible
answer.(Required)
On average, Japanese workers have lower hourly productivity and
work...

In 2015, the imaginary nation of Wonderland had a population of
495,810 and real GDP of $7,164,354,600. In 2016 it had a population
of 494,600, nominal GDP of $8,842,896,725 and GDP deflator of
121.5. The growth rate of real GDP per person in Wonderland between
2015 and 2016 was greater than ________ but less than
________.
A. more than 3.1 percent
B. 2.4 percent; 3.1 percent
C. 1.7 percent; 2.4 percent
D. 1.0 percent; 1.7 percent
E. 0.3 percent; 1.0...

answer the following questions
Q21.When the economy experiences an
expansion, it is most likely the case
that-------------------------------
GDP is increasing, unemployment is increasing, and inflation is
decreasing.
GDP is increasing, unemployment is decreasing, and inflation is
increasing.
GDP is decreasing, unemployment is decreasing, and inflation is
increasing.
GDP is decreasing, unemployment is decreasing, and inflation is
decreasing.
Q22. GDP is an important economic measurement because
it
provides valuable data on unemployment rates
measures the combined total of all intermediate and...

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