Naked Economics Chapter 8
que 8
International data show a positive correlation between political stability and economic growth.
a. Through what mechanism could political stability lead to strong economic growth?
b. Through what mechanism could strong economic growth lead to political stability?
Ans 8
a. Political stability could lead to strong economic growth by making the country attractive to investors. The increased investment would raise economic growth.
b. Strong economic growth could lead to political stability because when people have high incomes they tend to be satisfied with the political system and are less likely to overthrow or change the government.
Ans 9
In many developing nations, young women have lower enrollment rates in secondary school than do young men. Describe several ways in which greater …show more content…
educational opportunities for young women could lead to faster economic growth in these countries. ANSWER: Greater educational opportunities for women could lead to faster economic growth in these developing countries because increased human capital would increase productivity and there would be external effects from greater knowledge in the country. Second, increased educational opportunities for young women may lower the population growth rate because such opportunities raise the opportunity cost of having a child.
Ans 10 From 1950 to 2000, manufacturing employment as a percentage of total employment in the U.S.
economy fell from 28 percent to 13 percent. At the same time, manufacturing output experienced slightly more rapid growth than the overall economy.
a. What do these facts say about growth in labor productivity (defined as output per worker) in manufacturing?
b. In your opinion, should policymakers be concerned about the decline in the share of manufacturing employment? Explain.
ANSWER:
a. If output is rising and the number of workers is declining, then output per worker must be rising. b. Policymakers should not be concerned as long as output in the manufacturing sector is not declining. The reduction in manufacturing jobs will allow labor resources to move to other industries, increasing total output in the economy. An increase in productivity of workers (as measured by output per worker) is beneficial to the economy.
Ans 5
In the 1990s and the first decade of the 2000s, investors from the Asian economies of Japan and China made significant direct and portfolio investments in the United States. At the time, many Americans were unhappy that this investment was
occurring. a. In what way was it better for the United States to receive this Japanese investment than not to receive it? b. In what way would it have been better still for Americans to have done this investment? ANSWER: a. The United States benefited from the Chinese and Japanese investment because it made our capital stock larger, increasing our economic growth. b. It would have been better for the United States to make the investments itself because then it would have received the returns on the investment itself, instead of the returns going to China and Japan.
International data show a positive correlation between political stability and economic growth.
a. Through what mechanism could political stability lead to strong economic growth?
b. Through what mechanism could strong economic growth lead to political stability?
Ans 8
a. Political stability could lead to strong economic growth by making the country attractive to investors. The increased investment would raise economic growth.
b. Strong economic growth could lead to political stability because when people have high incomes they tend to be satisfied with the political system and are less likely to overthrow or change the government.
Ans 9
In many developing nations, young women have lower enrollment rates in secondary school than do young men. Describe several ways in which greater …show more content…
educational opportunities for young women could lead to faster economic growth in these countries. ANSWER: Greater educational opportunities for women could lead to faster economic growth in these developing countries because increased human capital would increase productivity and there would be external effects from greater knowledge in the country. Second, increased educational opportunities for young women may lower the population growth rate because such opportunities raise the opportunity cost of having a child.
Ans 10 From 1950 to 2000, manufacturing employment as a percentage of total employment in the U.S.
economy fell from 28 percent to 13 percent. At the same time, manufacturing output experienced slightly more rapid growth than the overall economy.
a. What do these facts say about growth in labor productivity (defined as output per worker) in manufacturing?
b. In your opinion, should policymakers be concerned about the decline in the share of manufacturing employment? Explain.
ANSWER:
a. If output is rising and the number of workers is declining, then output per worker must be rising. b. Policymakers should not be concerned as long as output in the manufacturing sector is not declining. The reduction in manufacturing jobs will allow labor resources to move to other industries, increasing total output in the economy. An increase in productivity of workers (as measured by output per worker) is beneficial to the economy.
Ans 5
In the 1990s and the first decade of the 2000s, investors from the Asian economies of Japan and China made significant direct and portfolio investments in the United States. At the time, many Americans were unhappy that this investment was
occurring. a. In what way was it better for the United States to receive this Japanese investment than not to receive it? b. In what way would it have been better still for Americans to have done this investment? ANSWER: a. The United States benefited from the Chinese and Japanese investment because it made our capital stock larger, increasing our economic growth. b. It would have been better for the United States to make the investments itself because then it would have received the returns on the investment itself, instead of the returns going to China and Japan.