AK_Chapter_07 - .. 4. Manufacturing sector. Good because...

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Chapter 7 Questions for Review 1. Value produced; total income earned; total expenditure on goods and services. High GDP + low growth rate = better (GDP, not growth, measures well-being). 2. Physical capital, human capital, natural resources, technological knowledge. 3. Human capital. 4. Higher saving = more capital = greater GDP. A policymaker might be deterred because people would have to reduce their consumption today. 5. Temporarily. 6. Use comparative advantage = consume more. 7. Probably lowers (capital dilution). 8. Research grants, tax breaks for R&D, patent system. Problems and Applications 1. You have to have goods and services to trade for other goods and services. 2. a. Factory, machines, robots, assembly line, labour… b. Books, classrooms, teachers… c. Planes, airports, pilots. .. d. Watering systems, harvesting machinery, trucks to transport, agricultural knowledge… 3. Computers, wireless phones, better cars.
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Unformatted text preview: .. 4. Manufacturing sector. Good because increased productivity. Manufactured goods are of lower cost. 5. a. Faster growth in the short run. b. Might be a transition when consumption-good industries get lower incomes, and investment-good industries get higher incomes. 6. a. Consumption: food, clothes; investment: houses. .. b. Consumption: salaries to clerks; investment: building roads 7. Loss of (current) consumption. A country can "over-invest" in capital. A country could "over-invest" in human capital. 8. a. Foreign direct investment. b. Increases Canadian GDP. The effect on Canadian GNP would be smaller. 9. a. Made our capital stock larger. 117 F Chapter 7/Production and Growth b. Canada would have received full returns on the investment itself. 10. Increased human capital Lower population growth. . 11. GDP 2030 = 1,000(1+0.035) 25 = 2,363 million GDP 2030 = 1,000(1 +0.040) 25 = 2,666 million...
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AK_Chapter_07 - .. 4. Manufacturing sector. Good because...

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