Business Macroeconomics, Tutorial 6
MP: Macroeconomics, 9
th
ed. Chapter 6
, CFO: POM, 9
th
edition Chapter
7
.
Tutorial 6:
Economic Growth
Class Problems and Applications
1
.
Japan’s real GDP was 561 trillion yen in 2007
and 569 trillion yen in 2008. Japan’s population
was 127.7 million in 2007 and 127.8 million in
2008. Calculate
a.
The economic growth rate.
b.
The growth rate of real GDP per person.
c.
The approximate number of years it takes for
real GDP per person in Japan to double if the
2008 economic growth rate and population
growth rate are maintained.
2.
Tables 1,2, and 3 present some data on three
hypothetical economies. Complete the tables by
figuring the measured productivity of labour and the
rate of output growth. What do the data tell you the
causes of economic growth?(
Hint
: Hoe fast are L
and K growing?)
Table 1 :
Period
L
K
Y
Y/L
Growth
Rate
of
output
1
1,052
3,065
4,506
2
1,105
3,095
4,674
3
1,160
3,126
4,842
4
1,218
3,157
5,019
Table 2 :
Period
L
K
Y
Y/L
Growth
Rate
of
output
1
1,052
3,065
4,506
2
1,062
3,371
4,683
3
1,073
3,709
4,866
4
1,084
4,079
5,055
Table 3 :
Period
L
K
Y
Y/L
Growth
Rate
of
output
1
1,052
3,065
4,506
2
1,062
3,095
4,731
3
1,072
3,126
4,957
4
1,084
3,157
5,216
3.
In the economy of Cape Despair, the
subsistence real wage rate is $15 an hour. Whenever real
GDP per hour rises above $15, the population grows,
and whenever real GDP per hour of labor falls below this
level, the population falls. The table shows Cape
Despair’s production function. Initially, the population of
Cape Despair is constant and real GDP per hour of labor is at
the subsistence level of $15. Then a
technological advance
shifts the production function upward by 50 percent at each
level of labor.
a.