Assume that the country of Ziponia produced real GDP equal to $5,000 (in billions) in the year 2000.
a. Calculate Ziponia’s output for each year from 2000 to 2006, assuming that it experienced a constant growth rate of 6 percent per year over this period. Use your answers to construct a graph similar to the one in Figure 1. Is the slope of thisgraph constant? Explain.
b. Calculate Ziponia’s output from 2000 to 2006, but this time assume that its growth rate was 6 percent from 2000 to 2001, and then the growth rate fell by 1 percentage point each year. Plot these points onto your graph from part (a). Is the slope of this graph constant? Explain.