Question

An Introduction to Macroeconomics

DISCUSSIN QUESTIONS

2. Consider a nation in which the volume of goods and services is growing by 4 percent per year. What is the likely impact of this high rate of growth on the power and influence of its government relative to other countries experiencing slower rates of growth? What about the effect of this 4 percent growth on the nation’s living standards? Will these also necessarily grow by 4 percent per year, given population growth? Why or why not? LO2

3. Did economic output start growing faster than population from the beginning of the human inhabitation of the earth? When did modern economic growth begin? Have all of the world’s nations experienced the same extent of modern economic growth? LO3

4. Why is there a trade-off between the amount of consumption that people can enjoy today and the amount of consumption that they can enjoy in the future? Why can’t people enjoy more of both? How does saving relate to investment and thus to economic growth? What role do banks and other financial institutions play in aiding the growth process? LO4

Answer 1

2) Nation's output is growing by 4% per year. Country with 4% of growth is likely to have greater government influence over world politics, greater military power, technological advancement over countries with slower rate of growth. We cannot be so sure that this 4% of output growth will surely raise standard of living of the whole nation because there could be multiple time of population growth during the same time, 4% of output growth may not be sustainable which cause pollution level to rise and reduce health level of people. People might be not happy from this 4% of growth because trees were cut, nation debt have increased which could reduce standard of living of the whole nation.