Question

⒈Real GDP per person in Northland is $30,000, while real GDP in Southland is $10,000, However, Northland's real GDP per person is growing at 1 percent per year, and Southland's real GDP per person is growing at 3 percent per year. If these growth rates persist indefinitely, then:
A) Northland's real GDP per person will decline until it equals Southland's.
B) Southland's real GDP per person will eventually be greater than Northland's.
C) Northland's real GDP per person will always be between 1 and 2 percent greater than Southland's.
D) Southland's real GDP per person will always be exactly 2 percent less than Northland's.
⒉Suppose the following information describes the economy:
GDP 2,000
Consumption 1,500
Government spending 300
Net taxes 400

Private saving equals ________; public saving equals ________; national saving equals ________.
A) 100; 100; 200 B) 200; 100; 500 C) 100; 200; 100 D) 200; 100; 300

Answer 1

1. Real GDP per person in Northland is $30,000, while real GDP in Southland is $10,000, However, Northland's real GDP per person is growing at 1 percent per year, and Southland's real GDP per person is growing at 3 percent per year. If these growth rates persist indefinitely, then:

Ans. B) Southland's real GDP per person will eventually be greater than Northland's.

Since the real GDP per person growth in Southland is greater than that of Northland, it will eventually lead to Southland's real GDP per person to be more than that of Northland's.

2. Ans. Private savings = GDP - C - T = 2000 - 1500 - 400 = 100

Public savings = T - G - TR = 400 - 300 - 0 = 100

National savings = Public savings + Private savings

= 100 + 100 = 200

A) 100; 100; 200