Download KEY Macro Questions Lesson 07

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ECO-201 Macroeconomics
Lesson 7 – Economic Growth
Week 5B
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Macroeconomics, 2nd Editions @ 4-points
1. For Discussion – page 182
Suppose the people in a certain economy decide to stop saving and
instead use all their income for consumption? They do nothing to add to
their stock of human or physical capital. Discuss the prospects for growth
of such an economy.
With no saving, there will be no investment. Capital that depreciates will
not be replaced. With a declining capital stock, future production is likely to
shrink; economic growth is likely to be negative.
10. For Discussion – page 182
The Case in Point on Asian economic growth suggested that Asian growth
would be difficult to sustain. Why couldn’t countries such as Singapore
simply continue to increase their quantities of factors of production at a
rapid rate and thus continue their rapid growth?
It is unlikely Singapore could continue to increase the quantities of factors at
the rate it has in the past. Further, the Case in Point suggests that Singapore
is likely to experience diminishing returns.
Week 2 Questions
Page 1 of 3
1. For Discussion – page 413
What is the difference between economic development and economic
growth?
Economic growth means that natural GDP is rising.
Economic development implies sustained increases in per capita GDP
whose benefits are widely shared.
Economic development thus focuses on actual rather than potential
performance; it requires that gains occur in per capita terms; and it
requires that all people of all income groups benefit from gains in output.
2. For Discussion – page 413
Look at the Case Point on the relationship between growth and
development. Why do you think that the distribution of income is more
likely to become more unequal during economic downturns?
During economic downturns the poor are more likely the ones that become
unemployed or otherwise adversely affected when efforts at development
become stalled because of loss of tax revenues to the government.
3. For Discussion – page 413
What are the implications for the long-run development of a society that is
unable to reduce its population growth rate bellows, say, 4% per year?
Because it is unlikely that rates of economic growth above 4-percent are
sustainable in the long run, a country that is unable to reduce its
population growth rate below 4-percent is likely to experience reductions in
per capita income.
Video Questions for Lesson 7
Select the ONE best answer
1. In the video "Economic Growth," part of Japan's recovery after World War
II was due to
a.
b.
c.
d.
high educational rates.
major technological advances.
increased natural resources.
A and B
2. In the video "Economic Growth," a significant difference between the
United States and Japan is
a.
the labor to capital ratio.
b.
the rate of savings.
c.
the efficient use of resources.
d.
none of the above