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Tutorial Exercise 4

Tutorial Exercise 4 - Introduction to...

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1 Introduction to Macroeconomics (ECON1002 C/D) School of Economics & Finance, University of Hong Kong Second Semester 2011-2012 Tutorial Exercise 4 (1, 2, 12 March): Please be well prepared to answer the following questions. 1. Consider the data in the following table. Country Real GDP per capita in 1960 (in 1996 dollars) Annual growth in real GDP per capita, 1960-2000 (in %) Canada 10,383 3.88 France 7,824 4.53 (a) What would the real GDP per capita level of France be in year 2000? (b) Assume that Canada grows at a constant annual rate of 3.88% from 1960 to 2020. If France caught up with Canada in 2020, what would the minimum average annual growth rate of its real GDP per capita be from 2000 to 2020? 2. Real GDP per person is a basic indicator of living standards and has grown dramatically over time in industrialized countries. Real GDP per person depends on two factors: average labor productivity (Y/N) and the share of the population that is employed (N/POP). The share of the population that is employed has risen steadily over the past 40 years in industrialized countries, but is ultimately limited (and likely to decrease in coming decades). (a) Set average labor productivity to \$75,000 and the share of the population employed to 0.70 (70%). What is the level of real GDP per person?

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