Question 1

1. Economic growth around the world The following table shows levels of real income per person in several economies during the years 1960 and 2010. The table further shows the average annual growth rate for each economy over this time period. For instance, real income per person in Zambia was $1,412 in 1960, and it actually declined to $1,309 by 2010. Zambia's average annual growth rate during this period was -0.15%, and it featured the lowest level of real income per person of any economy listed in the table in the year 2010. The levels of real income per person are reported in U.S. dollars using a base year of 2005. The following exercises will provide insight into the different growth experiences of these nations. Real Income per Person in 1960 Real Income per Person in 2010 Annual Growth Rate Economy (Dollars) ( Dollars) (Percent) Austria 9,773 35,031 2.59 Venezuela 7,307 9,762 0.58 Botswana 468 9,515 6.21 Malaysia 1,624 11,863 4.06 Honduras 1,932 3,146 0.98 Zambia 1,412 1,309 0.15Indicate which economy satisfies each of the following statements. Statement Austria Botswana Honduras Malaysia Venezuela Zambia This economy experienced the fastest rate of growth in real income O O O O O O per person from 1960 to 2010. This economy had the highest level of real income per person in the O O O O O year 2010. Consider the following four nations listed below. Which economy started 1960 with a level of real income per person of well below that of Venezuela and grew fast enough to catch up with and surpass Venezuela's real income per person by 2010? O Austria O Honduras O Malaysia O Zambia Grade It Now Save & Continue3. Productivity and growth policies Consider a hypothetical small island nation in which the only industry is publishing. The following table displays information about the economy over a two year period. Complete the table by calculating physical capital per worker as well as labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Physical Capital Labor Force Physical Capital per Worker Labor Hours Output Labor Productivity Year (Printing presses) (Workers) (Printing presses) (Hours) (Books) (Books per hour of labor) 2032 160 40 2,000 20,000 2033 180 60 3,900 29,250 Based on your calculations, in physical capital per worker from 2032 to 2033 is associated with in labor productivity from 2032 to 2033. Suppose you're in charge of establishing economic policy for this small island country. Which of the following policies would lead to greater productivity in the publishing industry? Check all that apply. O Subsidizing research and development into new publishing technologies Sharply increasing the interest rate on student loans to people pursuing advanced degrees in publishing Imposing restrictions on foreign ownership of domestic capital O Offering free public education to every worker in the country Grade It Now Save & Continue