Question
While we often consider the macro-economic models to cover an entire economy, one could apply such models to regions of a larger economy. For example,
While we often consider the macro-economic models to cover an entire economy, one could apply such models to regions of a larger economy. For example, consider California and Mississippi as two separate economies. In 2019 California had a state real GDP per capita of $70,662 and Mississippi came in at $35,015 (both adjusted to $2012). Over the past decade California's GDP per capita growth rate was roughly 2% per year whereas Mississippi's growth rate was roughly 0% per year. Assuming this is the long-run and the full employment model holds, what might explain this difference in outcomes? (There may be more than one reason, pick one and explain why that might help explain the difference.)
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