TOPIC 3: Economic Growth Flashcards
Which growth theory helps to explain the flat portion of the ‘hockey stick’ of economic growth?
what about the stick?
Malthusian growth theory
neoclassical for the upward slope..
Real GDP in Trumpland is growing at a steady rate of 33% per year. According to the Rule of 70, how many years will it take for Real GDP to double?
State your answer to 2 decimal places
70/33 = 2.12
At what rate will real GDP per person grow if the economy experiences real GDP growth of 8% and population growth of 6%?
8% - 6% = 2%
Growth in real gdp pp = real gdp growth - population growth
The population of Southampton was 249925 in 2015 and 254,275 in 2016.
Find the population growth rate.
State your answer to 2 decimal places.
254,275-249,925/ 249925 x 100 = 1.74%
Which growth theory argues that good institutions are an important for economic growth?
Endogenous growth theory
Suppose the production function is given by Y = K^(1/3)*L^(2/3), where K is the aggregate stock of physical capital, and L is the number of workers.
If each worker has 41 units of capital to work with, what is output per worker equal to?
State your answer to 2 decimal places.
41^1/3 x 1 ^2/3 = 3.45
The Gold Economy had real GDP of 100 in 2013 and 108 in 2014. If it continues to grow at this rate in the future, exactly how many years will it take for real GDP to double?
State your answer to two decimal places.
8% growth
70/8 = 8.75yrs
WRONG!!!
The New Forest economy had real GDP of 100 in 2016 (the base year), and 105.3 in 2017.
Calculate the approximate growth of real GDP using natural logarithms.
(State your answer to 2 decimal places.)
(ln(105.3) - ln(100)) x 100 = 5.164
The production function of the Iberian economy is given by Y = K^0.5*L^0.5, where K = 7 is the stock of physical capital, L = 40 is the number of workers (=population).
What is real GDP equal to?
(State your answer to 2 decimal places.)
real gdp (y) = 7^0.5 x 40^0.5 = 16.73
Which one of the following statements is correct? According to Malthusian growth theory:
An increase in population does not affect real GDP per person
An increase in population growth raises economic growth
Productivity is the engine of economic growth
An increase in population leads to diminishing returns, which means that gains in real GDP per person are reversed
An increase in population leads to diminishing returns, which means that gains in real GDP per person are reversed
In the economy of Highfield, Real GDP is curently equal to 100. If real GDP grows at 5.0% per year for the next 9 years, what will Highfield’s real GDP be equal to in 9 years’ time?
State your answer to 2 decimal places.
100 x 1.05^9 = 155.13
Cookieland’s real GDP was 100 dollars in 2016 and 109 dollars in 2017. If real GDP continues to grow at the same rate in the future, how many years would it take for Cookieland’s real GDP to increase from 109 dollars to 125 dollars?
State your answer to 2 decimal places.
125 = 109 X 1.09 ^ x
125/109 = 1.09 ^x
ln(125/109) / ln(1.09) = x. = 1.59
