Questions and Problems
Check Your Understanding
Question
B/45Rn6Z+Q0Ij7lAMWBPqkI3QSMhHw2/d+87zn7Fqdt8fOo6GFoWP2Z1lzsnUnuaWpNV4ImpxTgn6/v5myvN3qtdh0h4EC49vkNGjZ1+sY7PoKxgDt/EvKBFuOUiNTNmzrWGBc/8dRKr3k+v9BCS7690Nrzsz6ipSe/gMrMixqOb0yERbqLWIl6DfBlE6UF+fkXnjmBzWBT0HELGProb 7 1. Although abundant natural resources can be a blessing to a country, are they necessary to ensure economic growth and a prosperous economy?Question
nKmU88GaD3sYgWRunMZ8sjY4rdzGhc6zxwuMH9vWRTYGHmIbK4nsmzvydomsS7KSamy/EBzm3m387O8JuHEkMb3Alujn+cK5l0hIp2WVkn5qNmWX8HpC0cDcQ+qE9abdh5/MQr7q2kufuYNPProb 7 2. Why does a small difference in the economic growth rate lead to big differences over time?Question
tXGZFsM0idLquFa1uQEUbAsLsclkPh1tb8k8euXv7Viz8lJbDDG40bElmE1cYJlEbwdnxyIS648cfWFoGsYkqMqwWn9rMAPNaGrIV381qL6mcATXCrEXPA==Prob 7 3. What are some ways in which countries can improve labor productivity?Question
/3GuIkZ3A+VAmEgNbczSnfF1ajsO1Keg9XOUo/L3LnkBMa3VS5RbB2TE8EwZqf5/B+iv+EJIvF3wlAIU4BZpZ4xBKaPJOPcEfRTrT9iRZco=Prob 7 4. In what ways do governments help to build technology and ideas?Question
31pdoaHVxSA2kDcvkz/SxAuVPSn83wqhayfJy5iSmJN9dEMJZMs1GaLT2DdV2VJJxdHTvZpmKT3BV37gVrnRAidX4KaRsymT8D4ZBnUdlqfDl71yQYLSE04MMYuTEn5upUOghVkzsh0WCAKLuz+OVR/fDz3AOOc5NO0rmPCMMJu8hACegnInHw==Prob 7 5. Why is investment in human capital good for both individuals and fostering economic growth for the economy as a whole?Question
1szpUNWMO4gGEekwdBi8viH/kkZ55QHlssTF/So+XAfvq+JESw1QJYUAMh31UdMqZXBODUedTKbXkRnf+YzM+Ahu+/uIxyiu3RfM6yIl3KQ=Prob 7 6. Why is a stable financial system important to economic growth?
Apply the Concepts
Question
R1/5oJUaHsGCQrRtOBrcMjfQDyxiU3z6s8r89wNiwKFKYBOMdE50GXreiuCEc33726AEEkTNbI75yDzzZNz7tskUgXa+7mI1zT4HFGO9Lt9XEVGIt3jt+pr5MetgllHocmqSv9LYYcclxaLw2/GWKtD6ynj3FTws64yNDtVaDy7MZ5f3bzQQ+MN1oVMmjdf9kIC87VN4rfjBxbn7Prob 7 7.The standard of living we enjoy today is largely due to the investments of earlier generations of Americans. Do you agree? Why or why not?Question
rK21JpELJSMHoclEB+60XFc9puxYbXXIOsHzmA8Hwg4IXk/9fJJm35gbN22g8YVZ2x+aX6+wM4rYF6V1zoZIQoMhGeJqQFr+FIC9wNmcY/CpRJRlmvluafGS3x77lPHy+Ut1fZUfhzzMPN3Q6l50rEFacNEBL/1p4X5mCRspOiObCWVIWNskRfN1J8A=Prob 7 8.What role might foreign investment play in helping developing nations improve their growth rate and increase income levels?Question
dvKVi7+gRup7m/Ox8lVQ2xer+uY1p3AackK8XAtCcUE6Ew5SvAtUmrCnG4WhfHcPaSIin1j7kF2ZM7M5it4HHKDMRfmEUVyDWPnSTbRnAnM2Up2Xa7TzhLFYTrmqqSxHgUdQy0OreGTd7QWxFz3vZuSX1gA3nZZapuPRyaJvVXsJsXXH6xVV4Pk1iIjb7tHxRnSiGJpfrm7rZU/UpmFS3nBGiOU=Prob 7 9.Higher levels of savings and investment lead to greater rates of economic growth. What can government do to encourage more savings and investment?Question
q6SVz2Aad/2HaOiZQcHGnCFIdcIfcUv5OZ40tYSuB7HT4/0WPhcs/HDnA23hzxzjXf3HFb7+PqWEqvOaT0tUoyQu67mCkcJGxpbQn3oYTSkoJ2GSBG1L+atJo8YacsJB7vAM4dphV53yPZDvwcjYu+TGBhHaBYx9XR5fe/8bPYA4nTuer01EQH+5Y4nUsHSYdms0GGpmAlSNvs/5k0dOzgFfrWf27UBXLz6C92QUKAzsat++040Jlis7BW+BwerEQqGC/a3hzfDhHiwqYgyDVTL3/n4AkqRJn8IiOyvwfRQhPpfHuJgNPMst9vrsqMqxzIRc6SqUrOIbrk/2fubsQflA3UbH/M4XmERBg0hjSQW+iH2jeLFipkcqf4iJHq6HeDzhHpYy1x0H9qLyLK+ZjPw4orSvdzdBItMauRHIaDjW83SCHF9pPLx3f4s0QrxNi7vR21rDBGzCRWyukib052zApY8=Prob 7 10.Per capita income (or output) is the general measure used to compare the standards of living between countries. If a country’s population growth is higher than its economic growth, what happens to per capita income? What are some of the limitations to using per capita income as a measure to compare the well-being of different countries?Question
/QJlslQOX+iYyv+X73p3l9R9AAk8iASpXAu5TxOYtqGPZePTD7+LrZriimMShxWlDS3ZHvizM13qsey2HDTA4HrcmcXxvSn2YQ1u7lneUFqFg18WhCttCTP8RgFhipQCrq3+5+IvKevCqZkDRpKSBOkrfObdEms4PgfKqF2g0rqxum2WBJkXT9/t0JX3PkFAOdQ2xyLhDt1H6JR5vemo8/e+nuhvnojCitlhZ6mIu7TPti/sqUGxIPvI8AyQwYrRUgPiiobRc6v1ZWXCAY8gscIb8ig1Eq15UjdlsJ++znRemKuI/f1V6JBuFASp1wYc35KG4rCMtF2sAeOtjTAXLQyHrRUHuhcawfHI9FxIhoJxaYtKfRRIh+ENUoLixiXxiK/dtYiyJOJ6Il7VYqiVpKeS5zag13sd7UvTew==Prob 7 11.In 1988, Nobel Prize–winner Robert Lucas suggested that differences in growth rates between Egypt and India raise the most fundamental economic question of what causes economic growth. What makes this issue of growth so important? Is a long-term growth rate of 1.4% so different from one of 3.4%?Question
TvWOoBLPWTYklMpbXcdK5nvwwyKntyyArVQpTtShSbWRVu8kgJ1o2K91r70F5Nmpsxiizyle32HKFV8JyadVUGA6GRbw4kXE1HncsRVo0w9h+1GXbY/yZn31V9V3hHPePmhtppFxtjXrqBP2947ueQMVmys3vbjb/Bd58KYPieBUZjV5+o8/0Q0J1koANUDDsAKjR38+XJ+rLlSK7NYTTDmEtjM4wYGY1XH0pYaoQWlho5p2sPmHVkBlqhow1bRBbM/wNmE/1lw/v3ySjj604yVXVruVB78hPcwkLQaHzV81nLdRUkmzpq+LWEVIlB3q4n5twzUj3a4=Prob 7 12.One of the potential negative consequences of both economic and population growth is that we will eventually exhaust the Earth’s natural resources, leading to our demise. What kind of activities might prevent this from happening?
In the News
Question
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 7 13.Severe budget cuts at the federal and state level caused Education Secretary Arne Duncan to warn Congress about the long-term effects of education cuts on global competitiveness and economic growth (“Duncan Warns Congress on Impact of ‘Sequestration’ on Education Programs,” Washington Post, February 14, 2013). In 2013, nearly two-thirds of states still spent less money on education per student than in 2008; meanwhile, countries in Europe and Asia have increased spending on education despite the economic downturn. If the reduction in education spending in the United States does in fact slow economic growth, explain why the effects of the slower growth will be felt much more by your grandchildren than by you today.Question
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 7 14.Energy independence has been a goal for each of the presidential administrations since Richard Nixon in the 1970s (“U.S. Inches Toward Goal of Energy Independence,” The New York Times, March 22, 2012). But the increased focus on alternative energy sources, such as natural gas, wind, water, and solar, along with greater emphasis on fuel-saving technology (hybrid and plug-in cars) has only taken on greater significance in the last decade. How does achieving energy independence contribute to labor productivity and economic growth?
Solving Problems
Question
KQTsDr6RNX+hQ/DipEgF21bLu8LDVG1wo2R2xCGpNmI7rgNYjkwLlj0g91idFPrnzDL8U7aFXVp1iqH88x38mEKjhUDgvsZcvLqGexYdZ58OBJZYBj7Z87TPZDtmwmG/LlSwGqD/CrQ2iUYtrWd4Hc8O/2cl6UGIeiI+bvSBTV7vmeoNuq9JaZZlGyso6T/WSsRVhiKzFu0Cz1zo+CWcxVzeVvIDKFtk0ZL77NiyZajMFtcRCbACdSZL2Bk=Prob 7 15.Suppose you receive a stock tip that allows you to earn a 14% annual return. At this constant rate, about how long will it take to double your money using the Rule of 70?Question
/LV9+xevIJ+k43Ngvz8jfhKmCkKzyvynGcMWDA5sXC0jYiVjbhrCxKvBCLYN4gGGnKvLM4xTx0aREPwtwM63wqeTcZ/DTTC03xT62PH6EZNPEbhij853LmtxA8jnSETWmIz1pQeoF55Nizseq0APFJ6GdywWfysb0khLvqQPscgChecqZcRDE+txfZLmeg0ypdJvXz8Cf67RksgHkb/Zqwkuo3q3lx68mXFClh9kGyUIm5vZ5/5/y8/aFEdFIdod+znsGYVWRYTLXO314jF3MaYDw4743x7UZYJ68yiN7qtYxYqYN4xfIYdNCxtGj0HkProb 7 16.Suppose a new colony is created on the moon with the following production function: output = A × (L + K + H + N). If L, K, H, and N each equal 5, and technology (A) equals 3, how much output would this new colony produce?
Question
g2SaOr3/Xmgy0JidKylXkHc00NWJa7alH45+DSGzXjbZe9RedxWH0vf14UfRXMbcvr3VPF+CTfQ43hlbUM77B/mUuV+KwwikBo9fEH9WRZv1808StGPmG1M2GwDRGgilONwR3OS/Tf1BTNxSU0xt3cshZkOUDyvCsa1b8PHj3voedCNx0FcLum9wzxc9JXey+C4HAUrcVM+jG9m3RbRPW+3iXnjGiUoY4Ip0fyMkttWJzkcASb9rXdsBupsRawxtOVgPfTgUv8tUhdI9j0bhFlrw5jDMUnHHmr1U1znR1yiaoIUjkbIjT5sJ7HywunJM7Y/NVDwzr8K2Ps443Nu5dpRLwOJkdGZT3hZFGtcfXr3rsL4AProb 7 17.According to By the Numbers, approximately how many years did it take for real GDP per capita in the United States to double from $5,000 to $10,000? How about from $25,000 to $50,000? During which period was economic growth stronger in terms of annual growth?Question
v2NaQdSkq49n71p+wH+QkSgqaOY0931gGNa0rLPxFUqgnbc9/4XbeTMS99LB+o7usn00jVt3A0FAnYTTK23i9Pe1vEpvwItbh5kisLFwR0wFVxMtxPHIe9AgFb6o/5u7PvmoGD0MaTYUea/jyEFO1fO3Kp4/QNlz8yLEc7xTGnM93qkobfsLZ7TW6FjcJaw0PL1GXNpVAmAg407CaRdao2zeVg8d9nu8iUdhgBiOQUZngRc8rRrWQ2m7pUP9SdQWUndr77Ylmu5hQY5o1LWNxSCUcUrsp69O2dU4U88hqeSenRRhWJ+K0sABVJZncJI8swCO41YQIGJvTnf1mhfEm4LQifs0/12gW218j8xdycX+OpTGmPaDiu/wS9jiAU9qcpcA0YeQOsZrDRr2qIniQlN8bRVLt+UeProb 7 18.According to By the Numbers, what is the range of life expectancies for the countries whose GDP per capita was less than $5,000 in 2012? Compare these life expectancies with those with GDP per capita greater than $35,000. Is there a strong correlation between GDP per capita and life expectancy?