1. Which economy will grow faster: Country A with per capita income of $1,000 or
Country B with per capita income of $10,000? Why could this prediction be wrong?
2. How will each of the following affect a country’s growth rate?
a.
An increase in the percent change of the population.
b.
An increase in the savings rate.
c.
An improvement in technology.
d.
The government passes a law extending the time frame in which
the holder of a
patent has sole ownership of a technological innovation.
3. Answer the following:
a.
How many years will it take for income to double if a country’s total income
grows at 2%? 4%? 6%?
b.
If a country’s income doubles in 16 years, at what rate is it growing?
c.
In 2009 per capita output of the US was about $40,000. If real income is growing
at 2% annual rate, what will be the per capita output in 36 years? In 72 years?
d.
If real income is rising at an annual rate of 4% per year and the population is
growing at a rate of 1% per year, how
many years will it take for per capita
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 Spring '11
 DebraDailey
 Economics, per capita, Stock and flow, Per capita income

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