Tutorial 2 Long Run Growth 
ECON1020 Tutorial 2
Long-Run Economic Growth
Chapters 5 & 6
Submission due 6am, Monday 23rd of March.
Question 1
If we boost productivity, we can improve economic growth
Tony Abbott (Australian Prime Minister)
(a) What is labour productivity?
(b) Assuming Mr Abbott was talking about labour productivity, discuss this meaning of this quote. Do you agree with it?
(c) According to the economic growth model presented in the textbook, what are the two key factors which determine labour productivity?
Question 2
The less you eat, drink, buy books, go to the theatre or to balls, or to the pub, and the less you think, love, theorize, sing, paint, fence, etc., the more you will be able to save and the greater will become your treasure which neither moth nor rust will corrupt – your capital.
Karl Marx
(a) What is capital?
(b) Think of an example of a workplace and list three items of capital that would be employed there
(c) Describe what would happen to the labour productivity of that workplace if it was provided with ever increasing quantities of those items (but no additional workers)?
Question 3
In 2007, Egypt and Canada had a similar saving rate, each saving around 24% of GDP. The annual growth rate of real GDP per capita in Egypt was 5.3% while in Canada it was only 1%. Neither country ran significant trade surpluses or deficits over this period
(a) What does the saving rate measure? (Hint: you will need to start with the definitions of public and private saving)
(b) Given your answer to part (a) what does saving have to do with capital?
(c) Using the economic growth model from the textbook, can you explain why, despite having similar savings rates, real GDP grew faster in the Egypt than in Canada
Question 4
Using the economic growth model from the textbook, explain the impact of the following on GDP per capita and illustrate this impact with the appropriate diagram
a) The reorganisation of workers into production lines
b) The deployment of vacuum robots with
Long-Run Economic Growth
Chapters 5 & 6
Submission due 6am, Monday 23rd of March.
Question 1
If we boost productivity, we can improve economic growth
Tony Abbott (Australian Prime Minister)
(a) What is labour productivity?
(b) Assuming Mr Abbott was talking about labour productivity, discuss this meaning of this quote. Do you agree with it?
(c) According to the economic growth model presented in the textbook, what are the two key factors which determine labour productivity?
Question 2
The less you eat, drink, buy books, go to the theatre or to balls, or to the pub, and the less you think, love, theorize, sing, paint, fence, etc., the more you will be able to save and the greater will become your treasure which neither moth nor rust will corrupt – your capital.
Karl Marx
(a) What is capital?
(b) Think of an example of a workplace and list three items of capital that would be employed there
(c) Describe what would happen to the labour productivity of that workplace if it was provided with ever increasing quantities of those items (but no additional workers)?
Question 3
In 2007, Egypt and Canada had a similar saving rate, each saving around 24% of GDP. The annual growth rate of real GDP per capita in Egypt was 5.3% while in Canada it was only 1%. Neither country ran significant trade surpluses or deficits over this period
(a) What does the saving rate measure? (Hint: you will need to start with the definitions of public and private saving)
(b) Given your answer to part (a) what does saving have to do with capital?
(c) Using the economic growth model from the textbook, can you explain why, despite having similar savings rates, real GDP grew faster in the Egypt than in Canada
Question 4
Using the economic growth model from the textbook, explain the impact of the following on GDP per capita and illustrate this impact with the appropriate diagram
a) The reorganisation of workers into production lines
b) The deployment of vacuum robots with