Question

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 percent

According to the textbook, which of the following statements is (are) correct?
(x) Inward-oriented policies include imposing tariffs and other trade restrictions and these policies have
generally decreased productivity and growth in the countries that pursued them.
(y) Suppose a country has a small amount of capital. In addition, suppose the country removes trade
barriers. As a result the country exports wheat and imports farm machinery. Therefore, it is essentially
transforming wheat into farm machinery and as a consequence will not have to devote domestic
resources towards the development of farm machinery.
(z) Investment from abroad is usually encouraged when governments increase restrictions on foreign
ownership of domestic capital.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

12. Which of the following will increase a country’s real GDP per person?
(x) eliminating restrictions on foreign trade and reducing restrictions on foreign investment
(y) requirements that companies planning to open or expand must pay a large fee to file an application one
year prior to building new factories or expanding existing ones.
(z) a government focuses a larger amount of its spending on basic public health, education, and internal
order
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

Answer 1

10. Option D, So 1.59 percent is greater than 1 and less than 1.7 percent

	Population	Nominal GDP	GDP deflator	Real GDP = =Nominal GDP /(GDP deflator/100)	Growth rate
2015	495810			7164354600
2016	4,94,600	88428,96,725	122	7278104300	1.59%

11. Option B. Imposition of trade restrictions, would decrease competition and hence reduces the productivity. With the removal of trade barriers the foreign investment increases which increases the mechanization

12. Option C.

Eliminating restrictions would increase investment thereby increases output, and increase in government spending on public would increase the health status of individuals which too increases output