Suppose an economy’s real GDP is $100,000 in year 1 and $110,000 in year 2. What is the growth rate of its GDP? Assume that population was 200 in year 1 and 205 in year 2. What is the growth rate in GDP per capital?
What will be an ideal response?
$10,000/$100,000 or 10% from year 1 to year 2. The per capital growth can be calculated as follows: 500 per capital income in year 1 ($100,000/200); $536.59 per capital income in year 2($110,000/205). The change is 36.59 compared to base of $500 or 36.59/500 = 7.32%.
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Your opportunity cost of attending a lecture on the number of brain cells lost by binge-watching episodes of Here Comes Honey Boo Boo is
A) zero, since you already know that binge-watching will kill all of your brain cells. B) the price of the ticket for the lecture. C) the value of attending a meditation class, which is your next-best alternative. D) the total value of all other options you could have chosen instead of going to the lecture.
To make a tax system more progressive, policy makers could
A. Raise marginal tax rates for higher incomes. B. Narrow the tax base. C. Raise sales taxes on commonly purchased items. D. Allow all interest expenses to be deductible, not just interest on mortgages.
An increase in interest rates decreases the marginal revenue product of investment.
Answer the following statement true (T) or false (F)
Rational expectations economists believe that the potential effects of government policy changes are ______ addressed by households and firms.
a. slowly b. quickly c. unreasonably d. infrequently