Quiz_226 - 115 Drawagraphofcatch- . ?Explain Answer

Quiz_226 - 115 Drawagraphofcatch- . ?Explain Answer

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115) Draw a graph ofʺcatch-upʺthat shows where you would expect to see a country with lowsaving rates and low levels of health and education. How would you expect real GDP percapita to grow in a country like this? Explain.115)Answer: Countries with low saving rates and low levels of health and education are likely tohave low levels of real GDP. Normally, countries with a low initial level of GDPwill experience relatively high levels of growth in real GDP per capita (as shown atpointAin the graph below). However, with low saving rates, firms do not haveaccess to funds to invest in new factories, machinery, and equipment needed foreconomic growth. Also, with low levels of health and education, the labor force isless productive (when they are able to work), so real GDP per capita does not riseand the country remains at a point likeBin the graph below.Diff: 2Page Ref: 728-729/322-323Topic: Catch-upLearning Outcome: Macro 16: Discuss the obstacles to development in developing countries andways to address those obstaclesAACSB: Analytic Skills32
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Table 22-2CountryReal GDP per Capitain 1960(1996 dollars)Growth in Real GDPper Capita(1996 dollars)Belgium$7,7785.02%France7,8244.53%Canada10,3833.88%Denmark10,9883.47%116)Refer to Table 22-2.Consider the statistics in the table above in describing theindustrialized countries. Are these consistent with the economic growth model? Brieflyexplain.116)Answer: These statistics for selected industrial economies are consistent with the economicgrowth model. The countries with the lowest levels of real GDP per capita in 1960had the fastest growth rates between 1960 and 2000. The countries with the highest
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  • Spring '11
  • Lee
  • Economics, AACSB, Page Ref, Nontotient, Kitos War

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