Homework_Ch12 - GNP be larger or smaller? Q6. In 1990s and...

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Homework Ch 12: Production and Growth Problems and Applications Q2. Suppose that society decided to reduce consumption and increase investment. a. How would this change affect economic growth? b. What groups in society would benefit from this change? What groups might be hurt? Q4. What is the opportunity cost of investing in capital? Do you think a country can overinvest in capital? What is the opportunity cost of investing in human capital? Do you think a country can overinvest in human capital? Q5. Suppose that an auto company owned entirely by German citizens opens a new factory in South Carolina. a. What sort of foreign investment would this represent? b. What would be the effect of this investment on U.S. GDP? Would the effect on U.S.
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Unformatted text preview: GNP be larger or smaller? Q6. In 1990s and the first decade of the 2000s, investors from the Asian economies of Japan and China made significant direct and portfolio investments in the U.S. At the time, many Americans were unhappy that this investment was occurring. a. In what way was it better for the U.S. to receive this foreign investment than not to receive it? b. Is what way would it have been better still for Americans to have made this investment? Q9. International data show a positive correlation between political stability and economic growth. a. Through what mechanism could political stability lead to strong economic growth? b. Through what mechanism could strong economic growth lead to political stability?...
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