Ch 9 Problem Set (ECON E-202; Introduction to Macroeconomics; Wenyi Shen)

# Ch 9 Problem Set (ECON E-202; Introduction to Macroeconomics; Wenyi Shen)

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Unformatted text preview: Chapter 9 Problem Set I. Consider the following table displaying annual growth rates for nations X, Y and Z, each of which entered 2009 with real per capita GDP equal to \$20,000; W Annual Growth Rate () Country 2009 , 2010 - 201'1 ' 2012 X 7 1 3 4 Y . ' -4 5 7 9 _ Z _ 5 4 _ 3 _ _ a. Which nation most likely experienced a sizeable earthquake in late 2009 that destroyed a signiﬁcant portion of its stock of capital goods, but was followed by speedy investments in rebuilding the nation’s capital stock? What is this nation’s per capita real GDP at the end of 20 I 2, rounded to the nearest dollar? b. Which nation most likely adopted policies in 2009 that encouraged a gradual shift in production from capital goods to consumption goods? What is this nation’s per capita real GDP at the end of 2012, rounded to the nearest dollar? c. Which nation most likely adopted policies in 2009 that encouraged a quick shift in production from consumption goods to capital goods? What is this nation’s per capita real GDP at the end of 2012, rounded to the nearest dollar? 1. Chapter 9 Problem Set-~Answer Consider the following table diSplaying annual growth rates for nations X, Y and Z, each of which entered 2009 with real per capita GDP equaLto \$20_,_000:_P_ Annual Growthwlitate (%) Country 2009 2010 2011 2012 x 7 1 3 4 y 4 5 7 9 z 5' 4 3 2 a. “Which “nation Indost—IIlilcelynexperiehced a sizeable-Iearthquaheniri late 2009 I destroyed a signiﬁcant portion of its stock of capital goods, but was followed by speedy investments in rebuilding the nation’s capital stock? What is this nation’s per capita real GDP at the end of 2012, rounded to the nearest dollar? X, Annual Growth Rate declines from 7% to 1% from 2009-2010 szu,000*(1+7 %)*(1+1%)*(1+3%)*(1+4°/o)=323,153 Which nation most likely adopted policies in 2009 that encouraged a gradual shift in production from capital goods to consumption goods? What is this nation’s per capita real GDP at the end of 2012, rounded to the nearest dollar? Z; decreasing in capital goods decreases future production capacity, thus decreases growth rate \$2o,ooo*(1+5 %)*(1+4%)*(1+3%)*(1+2°/o)=\$22,945 Which nation most likely adopted policies in 2009 that encouraged a quick shift in production from consumption goods to capital goods? What is this nation’s per capita real GDP at the end of 2012, rounded to the nearest dollar? Y, increasing in capital goods increases future production capacity, thus increases growth rate, although in a diminishing amount. \$20,000*(1+4%)*(1+5%)*(1+7%)*(1+9%)=\$25,472 ...
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Ch 9 Problem Set (ECON E-202; Introduction to Macroeconomics; Wenyi Shen)

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