Question

1.Why is GDP per capita a better measure of well-being in a country than its natural resources?

2.When would you use the Rule of 72?

3.Say that two countries had GDP per capita of $10,000 50 years ago and today one has GDP per capita of $20,000 and the other of $40,000. Explain why this second country had or did not have twice the annual growth rate of the first country.

4.For this question, first calculate and report the per capita median income of all countries with data for the year 2010. Now, as you saw with the extract from the Penn World Tables, a typical annual growth rate from 1960 to 2010 was about 2% a year. Do you think that this means that the typical country has been growing at 2% for many centuries?

Answer #1

1. GDP per capita tells us about the income and expenditure of the average person living in a particular country while it indicates society’s standard of living which directly affects people’s happiness. On the other hand, having abundant or less natural resources doesn't tell us about the same. We can take the example of Singapore which is a country having almost no natural resources has one of the highest living standards in the South East Asia having per capita GDP of 64,581.94 USD (2018). From the above we can conclude that GDP per capita is a better measure of well-being in a country than its natural resources.

2. The Rule of 72 used to know the time taken (close approximation) by an investment to be duplicated with a fixed annual rate of interest. We get a rough estimate of the time period by simply dividing 72 by the annual rate of return.

The following table depicts statistics on GDP per capita (ie,
GDP/population) in column (1) and its growth rate for the country
groups (column 2) defined by GDP levels (High-income, Middle-income
and Low-income). They are all expressed as real (constant) GDP.
A
B
C
Country group
GDP per capita (Year 2010)
Average annual growth rate of real GDP per capita (Year
2000-2010)
GDP per capita (Year 2088)
High-income
38,293
0.9%
77024.76
Middle-income
3,980
4.8%
154192.5
Low-income
507
3.0%
5085.24
Throughout this...

1.The following table
depicts statistics on GDP per capita (ie, GDP/population) in column
(1) and its growth rate for the country groups (column 2) defined
by GDP levels (High-income, Middle-income and Low-income). They are
all expressed as real (constant) GDP.
(1)
(2)
(3)
Country group
GDP per capita (Year 2010)
Average annual growth rate of real GDP per capita (Year
2000-2010)
GDP per capita (Year 2088)
High-income
38,293
0.9%
?
Middle-income
3,980
4.8%
?
Low-income
507
3.0%
?
1) Approximate...

This question is an application of Rule of 72. Consider a
country for which GDP per capital doubles every 50 years. Calculate
the annual growth rate for this country. Consider another country
for which GDP per capita doubles every 25 years. Calculate the
annual growth rate for the second country. Given everything else
constant, calculate in how many years catch up effect will occur
between the two countries when initially, the first country’s GDP
per capita is 4 times that...

GDP per Capita Growth and Rule of 72
Current Year
Previous Year
Growth Rate
Real GDP
$8.4 trillion
$8.0 trillion
Population
202 million
200 million
GDP per Capita
$
$
Formulas you could use:
Growth Rate in percentage = (Current year value – previous year
value)/ previous year
GDP per Capita = Real GDP/population (Ch6 Section 6.4)
Future value = Present value x (1 + growth rate)^number of
years (Ch7 Section 7.2)
Rule of 72:
72/growth rate = number of...

The economy of Bartovia had a GDP per capita of 1,200 dollars in
1960 when its population was 15 million people. In 2018, Bartovia’s
aggregate GDP was 60 billion dollars and we know that its
population had grown at an average annual growth rate of 1% from
1960 to 2018.
a. Compute the aggregate GDP of Bartovia in 1960.
b. Compute the average annual growth rate of aggregate GDP in
Bartovia from 1960 to 2018.
c.Compute the population of Bartovia...

Economic growth is defined as:
a.
the percent change in per capita income, or GDP
b.
changes in technology
c.
the difference between the nominal and real GDP
d.
the percent change in prices, or GDP
e.
the decline in the unemployment rate
Assume that both Japan’s and the United States’ average annual
per capita GDP growth rates are 2 percent per year, and both
countries began with an initial per capita GDP of $1,000. However,
the United States has...

The real GDP per capita of country D doubles in 50 years. Annual
inflation rate is 25% and annual population growth rate is 2%.
Calculate the annual economic growth rate.
Calculate the annual nominal GDP growth rate.
Country D tries to expand the economy by cutting taxes and
increasing government spending. Explain why these polices are
undesirable for country D.
A serious riot occurs in Country D, and the country becomes
politically unstable. Many resources are
destroyed.
Draw an AD-AS...

The following questions are about production and growth.
Country
Current Real GDP per capita
Current Growth Rate
A
$15,468
1.98%
B
$13,690
2.03%
C
$6,343
3.12%
D
$1,098
0.61%
Which country is the richest? How do you know?
Which country is advancing most quickly? How do you know?
If a country increases capital investment, what does it do to
their growth rate?
Why do we use GDP per capita instead of GDP itself to determine
standard of living in a...

1 ) North Dakota's GDP per capita is $65,000, while South
Dakota's GDP per capita is $48,000. Advances in technology increase
North Dakota's GDP per capita over the following decade to $78,000.
If South Dakota benefits in the same way from those technologies,
what will South Dakota's GDP per capita be after a decade? A)
$57,600 B) $61,000 C) $65,000 D) $78,000
2
) According to Malthus, when the standard of living in any
economy is above subsistence, ________.
A)...

1. Describe what GDP per capita measure and Sources of
productivity growth.
2. Explain how government policy affects economic growth.
3. Describe briefly the major impediments to policy success.
4. Explain in your own words why we trade with other
countries.

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