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The real GDP per capita of country D doubles in 50 years. Annual inflation rate is...

The real GDP per capita of country D doubles in 50 years. Annual inflation rate is 25% and annual population growth rate is 2%.

    1. Calculate the annual economic growth rate.
    2. Calculate the annual nominal GDP growth rate.
    3. Country D tries to expand the economy by cutting taxes and increasing government spending. Explain why these polices are undesirable for country D.
    4. A serious riot occurs in Country D, and the country becomes politically unstable. Many resources are destroyed.
  2. Draw an AD-AS graph to show the effects of the riot.
  3. Explain why political instability reduces economic growth.
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