var imagesLarge = "krugmanwellsecon4-numbered_fig-ch24_fig_1,krugmanwellsecon4-numbered_fig-ch24_fig_3,krugmanwellsecon4-numbered_fig-ch24_fig_5,krugmanwellsecon4-numbered_fig-ch24_fig_6,krugmanwellsecon4-numbered_fig-ch24_fig_7,krugmanwellsecon4-numbered_fig-ch24_fig_8,krugmanwellsecon4-numbered_fig-ch24_fig_11,krugmanwellsecon4-numbered_fig-ch24_fig_12,"; var imagesXlarge = "krugmanwellsecon4-unnumbered_fig-ch24_un_01,krugmanwellsecon4-numbered_fig-ch24_fig_4,krugmanwellsecon4-numbered_fig-ch24_fig_9,krugmanwellsecon4-unnumbered_tab-ch9_untab_01,,"; var imagesXXlarge = "krugmanwellsecon4-numbered_fig-ch24_fig_2,krugmanwellsecon4-ch24-fig-21,krugmanwellsecon4-unnumbered_tab-ch24_untab_01,"; /*** CYU answers ***/ xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-1-1a'] = "
Economic progress raises the living standards of the average resident of a country. An increase in overall real GDP does not accurately reflect an increase in an average resident’s living standard because it does not account for growth in the number of residents. If, for example, real GDP rises by 10% but population grows by 20%, the living standard of the average resident falls: after the change, the average resident has only (110/120) × 100 = 91.6% as much real income as before the change. Similarly, an increase in nominal GDP per capita does not accurately reflect an increase in living standards because it does not account for any change in prices. For example, a 5% increase in nominal GDP per capita generated by a 5% increase in prices implies that there has been no change in living standards. Real GDP per capita is the only measure that accounts for both changes in the population and changes in prices.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-1-2a'] = "Using the Rule of 70, the amount of time it will take for China to double its real GDP per capita is (70/7.6) = 9 years; India, (70/4.3) = 16 years; Ireland, (70/3.1) = 23 years; the United States, (70/1.7) = 41 years; France, (70/1.2) = 58 years; and Argentina (70/0.88) = 80 years. Since the Rule of 70 can only be applied to a positive growth rate, we cannot apply it to the case of Zimbabwe, which experienced negative growth. If India continues to have a higher growth rate of real GDP per capita than the United States, then India’s real GDP per capita will eventually surpass that of the United States.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-1-3a'] = "The United States began growing rapidly over a century ago, but China and India have begun growing rapidly only recently. As a result, the living standard of the typical Chinese or Indian household has not yet caught up with that of the typical American household.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-2-1a'] = "Significant technological progress will result in a positive growth rate of productivity even though physical capital per worker and human capital per worker are unchanged.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-2-1b'] = "The growth rate of productivity will fall but remain positive due to diminishing returns to physical capital.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-2-2a'] = "If output has grown 3% per year and the labor force has grown 1% per year, then productivity—output per person—has grown at approximately 3% − 1% = 2% per year.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-2-2b'] = "If physical capital has grown 4% per year and the labor force has grown 1% per year, then physical capital per worker has grown at approximately 4% − 1% = 3% per year.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-2-2c'] = "According to estimates, each 1% rise in physical capital, other things equal, increases productivity by 0.3%. So, as physical capital per worker has increased by 3%, productivity growth that can be attributed to an increase in physical capital per worker is 0.3 × 3% = 0.9%. As a percentage of total productivity growth, this is 0.9%/2% × 100% = 45%.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-2-2d'] = "If the rest of productivity growth is due to technological progress, then technological progress has contributed 2% − 0.9% = 1.1% to productivity growth. As a percentage of total productivity growth, this is 1.1%/2% × 100% = 55%.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-2-3a'] = "It will take a period of time for workers to learn how to use the new computer system and to adjust their routines. And because there are often setbacks in learning a new system, such as accidentally erasing your computer files, productivity at Multinomics may decrease for a period of time.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-3-1a'] = "A country that has high domestic savings is able to achieve a high rate of investment spending as a percent of GDP. This, in turn, allows the country to achieve a high growth rate.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-3-2a'] = "It is likely that the United States will experience a greater pace of creation and development of new drugs because closer links between private companies and academic research centers will lead to work more directly focused on producing new drugs rather than on pure research.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-3-3a'] = "It is likely that these events resulted in a fall in the country’s growth rate because the lack of property rights would have dissuaded people from making investments in productive capacity.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-4-1a'] = "The conditional version of the convergence hypothesis says that countries grow faster, other things equal, when they start from relatively low GDP per capita. From this we can infer that they grow more slowly, other things equal, when their real GDP per capita is relatively higher. This points to lower future Asian growth. However, other things might not be equal: if Asian economies continue investing in human capital, if savings rates continue to be high, if governments invest in infrastructure, and so on, growth might continue at an accelerated pace.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-4-2a'] = "The regions of East Asia, Western Europe, and the United States support the convergence hypothesis because a comparison among them shows that the growth rate of real GDP per capita falls as real GDP per capita rises. Eastern Europe, West Asia, Latin America, and Africa do not support the hypothesis because they all have much lower real GDP per capita than the United States but have either approximately the same growth rate (West Asia and Eastern Europe) or a lower growth rate (Africa and Latin America).
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-4-3a'] = "The evidence suggests that both sets of factors matter: better infrastructure is important for growth, but so is political and financial stability. Policies should try to address both areas.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-5-1a'] = "Economists are typically more concerned about environmental degradation than resource scarcity. The reason is that in modern economies the price response tends to alleviate the limits imposed by resource scarcity through conservation and the development of alternatives. However, because environmental degradation involves a negative externality—a cost imposed by individuals or firms on others without the requirement to pay compensation—effective government intervention is required to address it. As a result, economists are more concerned about the limits to growth imposed by environmental degradation because a market response would be inadequate.
"; xBookUtils.showAnswers['krugmanwellsecon4-cyu-24-5-2a'] = "Growth increases a country’s greenhouse gas emissions. The current best estimates are that a large reduction in emissions will result in only a modest reduction in growth. The international burden sharing of greenhouse gas emissions reduction is contentious because rich countries are reluctant to pay the costs of reducing their emissions only to see newly emerging countries like China rapidly increase their emissions. Yet most of the current accumulation of gases is due to the past actions of rich countries. Poorer countries like China are equally reluctant to sacrifice their growth to pay for the past actions of rich countries.
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