ECON 202: Unit 1 & Unit 2 - Chapter Questions

Describe the effects of these exceptionally cold periods on the economies of these countries.

- Crop failures in Iceland may have caused the population to fall by half - Collapse of the Norse settlements in Greenland - Crop failures caused famines in Nordic countries and in France,

For Britain, identify a period of time when its growth rate was increasing and another period in which its growth rate was roughly constant. Which figure did you use, and why?

- After 1700 per capita real GDP is increasing - 1400 to 1600 per capita real GDP was roughly constant I used figure 1.1b with the ratio scale, since the slope of the variable measured in logarithms equals the growth rate.

Purchasing Power Parity (PPP)

An adjustment in gross domestic product per capita to reflect differences in the cost of living * a way to acknowledge that prices have changes over a thousand years. A way to equalize the value of a dollar throughout time.

How much difference does a couple of degrees warmer or colder make?

Between 1300 and 1850 there were a number of exceptionally cold periods as you can see from Figure 1.6b. Research this so-called 'little ice age' in Europe and answer the following.

Income Data

GDP, GDP per capita = Disposable Income

Inequality within countries has risen

Income distribution has become more unequal in many of the richer countries

Identify a period during which GDP per capita was shrinking (a negative growth rate) faster than in India. Which figure did you use and why?

It appears that a short period (early 1700s) there is a negative spike for the UK while for India where is slow steady decline in the per capita real GDP. I used the ratio scale graph (figure 1.1b) since the slope of the variable measured in logarithms equals the growth rate.

Imagine that the GDP per capita of a country had doubled every 100 years. You are asked to draw both linear and ratio scale graphs that plot GDP on the vertical axis, and the year on the horizontal axis. What will be the shapes of the curves?

Linear scale graph: An upward-sloping curve with increasing slope (called convex shape) ** An upward-sloping convex curve on a linear scale graph means that the GDP per capita increases by a greater and greater amount in absolute terms over time, consistent with a positive constant growth rate. Ratio scale graph: An upward-sloping straight line **An upward-sloping straight line on a ratio scale graph means that the growth rate of the GDP per capita is constant.

The GDP per capita of Greece was $22,494 in 2012 and $21,966 in 2013. Based on these figures, the growth rate of GDP between 2012 and 2013 (to two decimal places) was: a) -2.40% b) 2.35% c) -2.35% d) -0.24%

The GDP per capita changed by $21,966 - $22,494 = $528. The growth rate of GDP per capita is given by this change as a percentage of the 2012 figure: -$528/$22,494 = -2.35%.

Robert Kennedy (accumulation of material things) Which goods does he list as being included in a measure of GDP?

counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl.

What do you think a 'skyscraper' figure like Figure 1.2 would have looked like at the time of Ib'n Battuta (early to mid-fourteenth century)?

inequality (culture as a hierarchy) ** There was income inequality WITHIN countries but not as much ACROSS countries, so the height of the graph for the 90th percentile would be the similar across countries in the mid-14th century.

"hockey-stick" curves

represent the sustained rapid growth in GDP per capita experienced by countries worldwide

Robert Kennedy (accumulation of material things) Which goods does he list as missing from the measure of GDP?

the health of our children, the quality of their education or the joy of their play... It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.