Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
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Chapter 24, Problem 7QFR
To determine
To explain:
The way funds by foreign countries can help expand the output of a country.
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what causes two countries to have similar savings rates but different growth rate
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Draw a graph of "catch-up" that shows where you would expect to see a country with low saving rates and low levels of health and education. How would you expect real GDP per capita to grow in a country like this?
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Principles of Economics (Second Edition)
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- if two countries have the same Savings rates why is there Growth rates different?arrow_forwardOver a ten year period, country A and Country B had the same saving rates, but the result of the growth rate was different. Why?arrow_forwardEconomics It would seem that a higher Steady State level of Y/L (y*) and K/L (k*) is a good thing. We know that a high level of "s" leads to a higher Steady State. Show with diagrams why a rate of saving of, say, 80 or 90 percent may not be so good as far as the people in the economy are concerned.arrow_forward
- In an open economy, why is the supply of loanable funds upward sloping? a) A higher real interest rate discourages domestic consumers from buying foreign assets. b) A lower interest rate makes borrowing more expensive. c) A lower real interest rate encourages people to save. d) A higher real interest rate encourages people to save.arrow_forwardDraw a graph of "catch-up" displaying low saving rates, low levels of health, and low levels of education in a country.arrow_forwardIf the quantity of loanable funds supplied is greater than the quantity demanded, what are the excess funds used for? a. Canadians to purchase foreign financial assets b. Canadians to purchase domestic investments c. foreigners to purchase Canadian assets d. foreigners to purchase Canadian goodsarrow_forward
- Would you rather live in a nation with a high per capita GDP and low growth rate, or in a nation with a low per capita GDP and high growth rate?arrow_forwardIf foreign income and wealth decrease, this would most likely a. not affect the market for loanable funds. b. cause the supply of loanable funds to increase. c. cause the supply of loanable funds to decrease. d. cause the demand for loanable funds to increase in order for foreigners to maintain consumption. e. cause the demand for loanable funds to decrease.arrow_forwardDraw a graph of the supply and demand of loanable funds. Then, show how the interest rate will be affected when the following scenarios occur: a. The government implements a program that reduces investment tax credits. b. The government budget deficit is reduced by 30%. (Hint: Does the government still need to borrow?) c. More foreigners are saving their money in U.S. banks.arrow_forward
- 2. You are a manager at a large shampoo company and on the search for future markets. You identified two low income countries that look very dynamic: Country A has a GDP/capita growth rate of -1% and population growth rate of 9%. Country B has a GDP/capita growth rate of 7% and constant population. (a) Discuss which country you should focus on for your expansion. (b) Discuss if your answer would change if the products you are trying to sell are cars.arrow_forwardBriefly explain and critically evaluate the role of public and private investment in Pakistan. Also point out their role in achieving sustainable economic growth of Pakistan.arrow_forwardClassic Theories of Economic Growth and Development If the Philippines has to learn from Rostow, Harrod, and Domar, development can only happen when a country prepares for it. Given that premise, 1. Discuss five (5) ways which the country can do to increase its savings rate. 2. Describe fully five (5) ways that will ensure that if the Philippine government has accumulated savings, it will be used properly. Here is some information about Rostow, Harrod, and Domar:https://docs.google.com/presentation/d/1CWG0Ut4AieAGZvd2XrgiD4_pxUxU0_2JfQEIY7NTRbc/edit#slide=id.p1arrow_forward
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