Homework Answers
We can define compound growth as the average rate of growth experienced by an investment over a multi-year period. The larger and more chaotic the changes are from year to year, the better the compound growth method works.
- CAGR is one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time.
- Investors can compare the CAGR of two alternatives in order to evaluate how well one stock performed against other stocks in a peer group or against a market index.
- CAGR does not reflect investment risk.
Year starting GDP Growth rate End GDP
1 $5.12 1.03 $5.27
2 $5.27 1.03 $5.43
3 $5.43 1.03 $ 5.59
4 $5.59 1.03 $5.76
5 $5.76 1.03 $5.93
From year 1 to year 5 company has added $ 0.81 trillion i.e.($5.93 - $5.12)
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5. Define the concept of Compounding Growth. Now, assume an economy starts-off with a GDP of...
1- The nominal GDP growth rate is 10% with an inflation rate of 6% and a...
1- The nominal GDP growth rate is 10% with an inflation rate of 6% and a population growth rate of 1%. Thus, the real growth rate of GDP per capita is: 7%. 5%. 3%. 17%. 2- If real GDP per capita for Schruteland grew from $5 trillion to $10 trillion between 1980 and 2015, then which of the following was the approximate annual growth rate? 35% 2% 4% 6%
1. At an annual growth rate of 1.75% it will take _______ years for a country's GDP to double
1. At an annual growth rate of 1.75% it will take _______ years for a country's GDP to double. If GDP starts at a value of $100 million, then in 200 years we would expect the value of GDP to be _______ times larger. 2. If nominal GDP is growing at 5% per year, the inflation rate is 2% per year, and population growth is-190 per year then real GDP per capita is growing at _______ percent per year. 3. A country...
15. Consider an economy, with a production function given by Y-AK03L07. This economy's annual GDP growth...
15. Consider an economy, with a production function given by Y-AK03L07. This economy's annual GDP growth rate is 5%. Also assume that L and Kare both growing at annual rates of 2%. Calculate the growth rate of total factor productivity for this economy. a. 2.0% b. 3.0% 4.0% c. d. 5.0% 16. Suppose output is determined by a Cobb-Douglas production function Y=AK L1 Where 0ca<1. If total factor productivity (A) remains constant, but labour (L) and capital (K) inputs both...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illust...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
The following table gives real GDP figures for an economy for four years. Fill in the growth rate for each yea...
The following table gives real GDP figures for an economy for four years. Fill in the growth rate for each year, and then find the average annual growth rate for the period. Enter all answers as percentages rounded to one decimal place. Growth Rate ( % ) Real GDP Year 100 billion 1999 110.0 bilion 2000 121.0 bilion % 2001 128.3 billion % 2002 The average annual growth rate for this period is
Question 2 (1 point) In an open economy suppose that GDP is $12 trillion. Consumption is...
Question 2 (1 point) In an open economy suppose that GDP is $12 trillion. Consumption is $8 trillion and government spending is $2 trillion, Taxes are $0.5 trillion. Exports are $1 trillion and imports are $3 trillion. What is private saving? $4 trillion $3.5 trillion $2.5 trillion $1.5 trillion Question 1 (1 point) Interest rate (%) Supply of loanable funds Demand for loanable funds 0 10 20 30 40 50 60 70 80 90 100 Quantity of loanable funds (billions...
Question 5 a) Let's assume that the total investment (% of GDP) and saving rates are...
Question 5 a) Let's assume that the total investment (% of GDP) and saving rates are the same for two hypothetical countries in Asia. Aruba had a 4% growth rate of average annual income per capita and Smalland had a 1% growth rate. Based on the economic concept/s you have learned, explain what would have caused the growth rates to be different? Diagram/s are required. (5 marks)
Inflation rate, Solow growth curve ut of 2.0 AD (M+V = 12%) 12% Real GDP growth rate Refer to the AD/AS graph 5 abo...
Inflation rate, Solow growth curve ut of 2.0 AD (M+V = 12%) 12% Real GDP growth rate Refer to the AD/AS graph 5 above. It shows an AD curve consistent with a spending growth of 12%. Assume the Solow growth rate is 5%. What does the model predict for the inflation rate when the economy is growing at the Solow rate? Select one: O a.4% O b.7% O c.0% O d. 3%
The table above is the data for country D, a developed country.
Current YearPrevious YearGrowth RateReal GDP$8.4 trillion$8.0 trillionPopulation202 million200 millionGDP per Capita$$Formulas you could use:- Growth Rate in percentage = (Current year value - previous year value)/ previous year- GDP per Capita = Real GDP/population (Ch6 Section 6.4)- Future value = Present value x(1+ growth rate )^number of years (Ch7 Section 7.2)- Rule of 72 :- 72 / growth rate = number of years to double the actual value (Ch19 Section19.2)The table above is the data for country D, a developed...
Calculate the future value in 5 years of $2100 today with annual compounding and a 10%...
Calculate the future value in 5 years of $2100 today with annual compounding and a 10% annual interest rate. Suppose someone saves $1000 today and will have $1052 one year from today. If compounding is daily (assume 365 days in a year), what must be the interest rate on this account? Jane offers Kathy the following deal. Jane will give Kathy $900 today if Kathy gives Jane $1100 in 2 years-time. Suppose there is quarterly compounding and the quarterly interest...
15. Consider an economy, with a production function given by Y-AK03L07. This economy's annual GDP growth rate is 5%. Also assume that L and Kare both growing at annual rates of 2%. Calculate the growth rate of total factor productivity for this economy. a. 2.0% b. 3.0% 4.0% c. d. 5.0% 16. Suppose output is determined by a Cobb-Douglas production function Y=AK L1 Where 0ca<1. If total factor productivity (A) remains constant, but labour (L) and capital (K) inputs both...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
The following table gives real GDP figures for an economy for four years. Fill in the growth rate for each year, and then find the average annual growth rate for the period. Enter all answers as percentages rounded to one decimal place. Growth Rate ( % ) Real GDP Year 100 billion 1999 110.0 bilion 2000 121.0 bilion % 2001 128.3 billion % 2002 The average annual growth rate for this period is
Question 2 (1 point) In an open economy suppose that GDP is $12 trillion. Consumption is $8 trillion and government spending is $2 trillion, Taxes are $0.5 trillion. Exports are $1 trillion and imports are $3 trillion. What is private saving? $4 trillion $3.5 trillion $2.5 trillion $1.5 trillion Question 1 (1 point) Interest rate (%) Supply of loanable funds Demand for loanable funds 0 10 20 30 40 50 60 70 80 90 100 Quantity of loanable funds (billions...
Question 5 a) Let's assume that the total investment (% of GDP) and saving rates are the same for two hypothetical countries in Asia. Aruba had a 4% growth rate of average annual income per capita and Smalland had a 1% growth rate. Based on the economic concept/s you have learned, explain what would have caused the growth rates to be different? Diagram/s are required. (5 marks)
Inflation rate, Solow growth curve ut of 2.0 AD (M+V = 12%) 12% Real GDP growth rate Refer to the AD/AS graph 5 above. It shows an AD curve consistent with a spending growth of 12%. Assume the Solow growth rate is 5%. What does the model predict for the inflation rate when the economy is growing at the Solow rate? Select one: O a.4% O b.7% O c.0% O d. 3%
Calculate the future value in 5 years of $2100 today with annual compounding and a 10% annual interest rate. Suppose someone saves $1000 today and will have $1052 one year from today. If compounding is daily (assume 365 days in a year), what must be the interest rate on this account? Jane offers Kathy the following deal. Jane will give Kathy $900 today if Kathy gives Jane $1100 in 2 years-time. Suppose there is quarterly compounding and the quarterly interest...
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