Hw3
Tubo Akangbou
Principles of Macroeconomics
Spring 2014
HW3
1) If a country has $100 billion of real GDP today, what will be its real GDP in 50 years if it grows at an annual growth rate of (3 Points)
a. 1.4 percent
(
100 Billion)(1+.014)^50 = 200.4 Billion
b. 2.8 percent
(
100 Billion)(1+.028)^50 = 397.79 Billion
c. 7 percent
(
100 Billion)(1+.07)^50 = 2.9457 Trillion
d.
2) What is the difference between labor and human capital? How can human capital be increased? ( 2 points)
Labor Capital per worker is the stock of equipment and structures that are used to produce goods and services while Human Capital per worker is the economist term for the knowledge and skills that workers acquire through education, training, and experience. Human Capital can be increased by Encouraging education and training.
3) What does growth rate of GDP measure? Would you rather live in a nation with a high level of
GDP and low growth rate or in a nation with a low level of GDP and a high growth rate?
Explain your answer. (4 Points)
Growth Rate of GDP measures how rapidly real GDP per person grew in the typical year. I would rather live in a nation with a high level of GDP and low growth rate because I know if I lived in a low level GDP nation with a high growth rate the growth rate would be difficult to maintain after some time. So the better choice would be the high level of GDP and low growth rate.
4) Form the BLS website, plot the annual labor productivity (output per hour) for the U.S. from
1947-2013 in excel. What’s the general trend in labor productivity over time? How would you interpret labor productivity data in a particular year? (6 Points)
The General trend in labor productivity has been increasing over time. If in the base year of 2009 an average worker produced 100 dollars the same person in a different year would only produce the value the chart says.
Principles of Macroeconomics
Spring 2014
HW3
1) If a country has $100 billion of real GDP today, what will be its real GDP in 50 years if it grows at an annual growth rate of (3 Points)
a. 1.4 percent
(
100 Billion)(1+.014)^50 = 200.4 Billion
b. 2.8 percent
(
100 Billion)(1+.028)^50 = 397.79 Billion
c. 7 percent
(
100 Billion)(1+.07)^50 = 2.9457 Trillion
d.
2) What is the difference between labor and human capital? How can human capital be increased? ( 2 points)
Labor Capital per worker is the stock of equipment and structures that are used to produce goods and services while Human Capital per worker is the economist term for the knowledge and skills that workers acquire through education, training, and experience. Human Capital can be increased by Encouraging education and training.
3) What does growth rate of GDP measure? Would you rather live in a nation with a high level of
GDP and low growth rate or in a nation with a low level of GDP and a high growth rate?
Explain your answer. (4 Points)
Growth Rate of GDP measures how rapidly real GDP per person grew in the typical year. I would rather live in a nation with a high level of GDP and low growth rate because I know if I lived in a low level GDP nation with a high growth rate the growth rate would be difficult to maintain after some time. So the better choice would be the high level of GDP and low growth rate.
4) Form the BLS website, plot the annual labor productivity (output per hour) for the U.S. from
1947-2013 in excel. What’s the general trend in labor productivity over time? How would you interpret labor productivity data in a particular year? (6 Points)
The General trend in labor productivity has been increasing over time. If in the base year of 2009 an average worker produced 100 dollars the same person in a different year would only produce the value the chart says.