1.Based on the following table answer parts a to d.

Country

Current real per capita income

Current growth rate

Country 1

20,000

1.5%

Country 2

15,000

2%

Country 3

7,000

4%

a.Which country is the richest?

b.Which country is advancing most quickly?

c.Which country would likely see the greatest benefit from an increase in physical capital investment? Why?

d.Referring to [c], would this country continue to see the same degree of benefits from an increase in capital investment forever? Why?

Short Questions (15 marks)

1.Your friend argues real GDP per capita is a good measure of economic well-being, as it shows the income levels of the country. Provide some counter arguments that show some limitations of the GDP measure

2.In light of the Covid-19 virus, what kind of open market operations should the government follow in order to expand demand in the economy? Describe the full process, including impact on GDP (with graphs)

3.Use the model of aggregate demand and aggregate supply (long run and short run) to explain how each of the following would affect real GDP and the price level in the short run. Include graphs in your answers.

a.An increase in government purchases

b.A major improvement in technology

c.A reduction in net exports

4.The Canadian government wants to use an open immigration policy which encourages more people to move to Canada as they believe this can contribute to economic growth in the country.

5.

6.Do you support this viewpoint of the government? Justify it using the lessons from the course.

7.