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
- Draw an AD-AS graph to show the effects of the riot.
- Explain why political instability reduces economic growth.