Chapter 13 Why Do Economies Grow?

| November 9, 2018

31)
At a 3.5% annual growth rate it would take 20 years for GDP per capita to
double.

32)
Economists who have studied economic growth find strong evidence of
convergence.

33)
Explain the two basic mechanisms that increase GDP per capita over the long
term.

34)
Suppose that one country has a GDP that is 10% of its richer neighbor, but the
poorer country is growing at a rate of 8% per year while the richer country is
growing at a rate of 2% per year. Which country will be richer in 60 years?

35)
If real GDP is 100 in year 1, and grows at a rate of 3% per year for 9 years,
what will the GDP be in 9 years?

36)
If an economy grows at 6% per year, how many years would it take for real GDP
to double?

37)
Why is it difficult to make accurate and valid comparisons of real GDP or GNP
for different countries, and how do the World Bank and the IMF deal with these
difficulties?

38)
Explain the economic concept of convergence.

13.2 Capital Deepening

1)
If a firm increases its capital stock per person while holding constant the
number of workers employed, the firm is said to experience
A)
capital augmentation.
B)
investment deepening.
C)
labor intensity.
D)
capital deepening.

2)
Decreases in the stock of capital will lead to
A)
increases in wages and total GDP.
B)
decreases in wages and increases in GDP.
C)
increases in wages and decreases in GDP.
D)
decreases in wages and GDP.

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