Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following two scenarios. Scenario 1 - Uninterrupted Growth Per capita GDP starts at $909 and grows by 5.2% each year for 5 years.

Consider the following two scenarios. Scenario 1 - Uninterrupted Growth Per capita GDP starts at $909 and grows by 5.2% each year for 5 years. Then it continues to grow at 5.2% for 75 more years. Scenario 2 - A Depression Before Growth Per capita GDP starts at $909 but a recession lasting for 5 years shrinks GDP per capita by 14% for each of those years. Then the economy recovers and grows by 5.2% for the next 75 years. How much lower is per capita GDP at the end of Scenario 2 compared to Scenario 1? Note: If the Great Depression never happened, and the U.S. experienced normal growth over those years instead, GDP per capita today might be as high as $180,000. Since our GDP per capita is more like $60,000 today, that means we have $120,000 less per person today because of the Depression. So, with those numbers, my answer to this question would be "120,000". TL;DR - Enter your answer as a positive number, not a negative one. Round your final answer to two decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Michael Parkin

12th edition

133872297, 133872293, 978-1292094632

More Books

Students also viewed these Economics questions

Question

Purpose: What do we seek to achieve with our behaviour?

Answered: 1 week ago

Question

An action plan is prepared.

Answered: 1 week ago