Finally, note that as Y/L grows (each worker produces more), then GDP per person will grow as workers will be earning more. Y/L
2019/12/23 下午 12(08 Long Run Growth III: Econ 104 , Sec. 3 , Fa19 第 7 页（共 11 页） 1 / 1 ړ ᳯ᷌ 10 Say that over 10 years real GDP in a foreign country grew from 1 billion to 5 billion. Then, you used (5 billion / 1 billion) - 1 to calculate average annual growth rate. Which of the following is wrong with the use of this formula? 10 you don't subtract 1 the division should be 1 billion / 5 billion the exponent is incorrect ྋᏟ ྋᏟ ! The exponent should be 1/10 and not 10. 1 / 1 ړ ᳯ᷌ 11 Consider the per-worker production function. On the vertical axis you'll find ___ and on the horizontal axis you'll find ___. Y, K K, Y Y/L, K/L ྋᏟ ! This is straight from class on how this graph is set up. K/L, Y/L
2019/12/23 下午 12(08 Long Run Growth III: Econ 104 , Sec. 3 , Fa19 第 8 页（共 11 页） This is straight from class on how this graph is set up. 1 / 1 ړ ᳯ᷌ 12 If real GDP doubled in 10 years then you know that ___. the rate of inflation is about 7 percent the rate of economic growth is about 7 percent ྋᏟ ! First, changes in real GDP measure economic growth, not inflation. Second, this is an application of the Rule of 70 as deals with GDP doubling. Recall the Rule of 70: 70/growth rate = approximate time to double. If real GDP doubled in 10 years, then the rate of economic growth would be 7 years as 70/7 = 10. the rate of inflation is about 10 percent the rate of economic growth is about 10 percent 1 / 1 ړ ᳯ᷌ 13 Say 50 years ago the CPI had a value of 70 and today's value is 236.1. Would (70/236.1) - 1 be the average rate of inflation over these years? 50 yes no ྋᏟ ྋᏟ !
2019/12/23 下午 12(08 Long Run Growth III: Econ 104 , Sec. 3 , Fa19 第 9 页（共 11 页） It would be (236.1/70) - 1 (and note that you'd multiply by 100 to make it a percent). (1/50) 1 / 1 ړ ᳯ᷌ 14 Across the economy the following take place: (i) people have more education, (ii) firms add machines that are more efficient (iii) firms import ideas to run factories more efficiently. For how many of the above listed reasons does the curve in the per-worker production function shift up?
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