Question 20: A country has a 2008 growth rate of 4.2% and a 2007 GDP of...
Question 20: A country has a 2008 growth rate of 4.2% and a 2007 GDP of $8,222 (in billions). What was the GDP in 2008?
Question 31: If a country's initial real GDP is $10,000 and its yearly growth rate of GDP is 3.5%, use the Rule of 70 to determine approximately how many years it would take for this economy to double its GDP.
A) 24.5 years B) 7 years C) 4.5 years D) 20 years
Question 38: Consider the economy of a small country. It has capital stock equal to 1600 units and a production function of Y = K1/2. If the depreciation rate is 15% and the investment rate is 25%, what will the level of capital stock be next year for this small country?
A) 2240 units B) 1600 units C) 1850 units D) 1370 units
Question 40: Consider the economy of a small country. It has capital stock equal to 400 units and a production function of Y = K1/2. If the depreciation rate is 15% and the investment rate is 10% of output, what will the level of investment be for this small country?
A) 40 units of capital B) 2 units of capital C) 60 units of capital D) 4 units of capital
Homework Answers
20. A country has a 2008 growth rate of 4.2% = 0.042 and a 2007 GDP of $8,222 billions. Suppose GDP in 2008 is Q2.
Therefore, (Q2- $8,222)/$8,222 = 0.042
Or, Q2 - $8,222 = $345.324
Or, Q2 = $8567.324
Answer: $8567.324 billions
31. According to the rule of 70, no. Of years to double = 70/annual percentage growth rate
Therefore, it will take (70/3.5) = 20 years for this economy to double it's GDP.
Answer: 20 years
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Question 20: A country has a 2008 growth rate of 4.2% and a 2007
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