Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 27, Problem 11CQ
To determine
Check whether the people of high income per capita countries will help or hurt the low income per capita countries.
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Why is saving important for economic growth and development?
Distinguish between saving and investment.
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?
Chapter 27 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Economics 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_forwardif two countries have the same Savings rates why is there Growth rates different?arrow_forwardDraw a graph of "catch-up" displaying low saving rates, low levels of health, and low levels of education in a country.arrow_forward
- What is national saving?arrow_forwardIf GDP is $20 trillion, how many years will it take for GDP to increase to $160 trillion if annual growth is 10 percent?arrow_forwardBriefly explain whether investment spending is likely to increase more rapidly in a country with a rapidly growing population or in a country with a slowly growing population. Does your answer depend on whether the country is a high-income industrial country or a low-income developing country?arrow_forward
- How come higher saving leads to more rapid growth?arrow_forwardIn 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_forwardWhy 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 fifinancial institutions play in aiding the growth process?arrow_forward
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