Economics (McConnell), 18th Edition

Chapter 25: Economic Growth

Key Questions

1. Suppose an economy's real GDP is $30,000 in year 1 and $31,200 in year 2. What is the growth rate of its real GDP? Assume that population is 100 in year 1 and 102 in year 2. What is the growth rate of real GDP per capita?

2. What are the four supply factors of economic growth? What is the demand factor? What is the efficiency factor? Illustrate these factors in terms of the production possibilities curve.

3. To what extent have increases in U.S. real GDP resulted from more labor inputs? From higher labor productivity? Rearrange the following contributors to the growth of productivity in order of their quantitative importance: economies of scale, quantity of capital, improved resource allocation, education and training, technological advance.

4. Relate each of the following to the recent productivity acceleration:

  1. Information technology
  2. Increasing returns
  3. Network effects
  4. Global competition

Chapter 25 Key Question Solutions (30.0K)
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