MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Chapter 7, Problem 5DQ
To determine
To describe: The impact of sharp changes of Investment by United States.
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=
5√K and has a capital
Country A produces GDP according to the following equation: GDP
stock of 13,399. If the country devotes 13% of its GDP to producing or repairing investment goods,
how much is this country currently investing?
Rounds your answer to two decimal places.
China invests almost 50 percent of its annual production in new capital compared to 15 percent in the United States. Capital per hour of labor in China is about 25 percent of that in the United States. Explain which economy has the higher real GDP per hour of labor, the faster growth rate of labor productivity, and which experiences the more severe diminishing returns.
What can you say about Turkey in the average GDP growth for the next 3 years (2021-2023)?
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- With the following excerpts, how could economic growth affect the value of a country’s importsarrow_forwardAssume that a country experiences a permanent increase in its saving rate. Which of the following will occur as a result of this increase in the saving rate?arrow_forwardWhen using AD/AS analysis to illustrate changes within an economy, which of the following would NOT need to be considered when looking at changes to economic growth? Select one: a. More efficient use of the capital stock b. Developing a more efficient capital and finance sector c. Increased labour productivity d. Increased availability of social capitalarrow_forward
- According to the East Asia and Pasific Economic update published by the World Bank in April2015, the following factors have affected China’s real GDP in 2015.• Global economic recovery supports a moderate increase in China’s exports.• China benefits from a fall in the world price of oil• Chinese government to cut excess capacity in heavy industry• U.S firms to relocate their labor-intensive manufacturing industries to low-cost acountries. 1. How each of the above factors changes short-run aggregate supply, long run aggregate supply, aggregate demand, or some combination of them.arrow_forward1) Complete the table. Please note that the world price of T in terms of S is 1,2 and GDP calculated in terms of S. (1T=1,2 S) Before Growth After Growth Percentage Change Production of T Consumption of T Export of T Production of S Consumption of S Import of S TOT GDP 2250 2925 900 810 1800 1,2 1,2 a) Explain what type of Economic Growth is this country experiencing? Show your calculations.arrow_forwardWith the following images, how can economic growth affect the value of a country’s imports?arrow_forward
- Country A produces GDP according to the following equation: GDP = 5√K or can be read as (5 square root of K), and has a capital stock of 10,000. If the country devotes 25% of its GDP to making investment goods, how much is this country investing? Additionally, if 1% of all capital goods depreciate every year, is the country’s GDP increasing, decreasing or remaining constant?arrow_forwardExplain the difference between foreign direct investment (FDI) and foreign portfolio investment (FPI)? Explain which one is more useful to accelerate economic growth of home country.arrow_forwardMany countries import considerable amounts of goods and services from other countries. Yet economists argue that a nation can enjoy a high standard of living only if it can produce a large quantity of goods and services itself. Can you reconcile these two facts?arrow_forward
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