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?

#### You've reached the end of your free preview.

Want to read all 11 pages?

- Fall '10
- staff