Macro Homework 2

Real GDP per capita in the United States grew from about​ $6,000 in 1900 to about $ 49, 571 in 2007​, which represents an annual growth rate of 1.99 percent. If the United States continues to grow at this​ rate, it will take ______ years for real GDP per capita to double.

35.17 RULE OF 70 --------------- AGR/70 Time is takes real GDP per capita to double.

The movement from point B to point C ​represents

technological change

The movement from point A to point C ​represents

technological change and more capital per hour worked

Since each​ country's real GDP is measured in a different​ currency, before one can compare the real GDPs of different​ countries, it is necessary to use

the purchasing power parities​ (PPPs) as a currency converter.

The agency that identifies a recession is the

NBER - National Bureau of Economic Research

Consider the following data for a closed​ economy: Y​ = ​$14 trillion C​ = ​$9 trillion I ​= $1 trillion TR = ​$2 trillion T​ = ​$3 trillion

Private Savings= Y+TR-T-C Public Savings= T-G-TR Government Purchases = G = Y-C-I Gov. Budget Balance = T-G-TR

Average Annual Growth Rate

Sum of Growth Rates / Number of Years

When is the government budget in deficit?

T < ( G + TR )

When is the government budget in surplus?

T > ( G + TR )

If the government changes its tax policy and taxes only real interest payments and not nominal interest​ payments

both saving and investment increase.

The shift from S1 to S2 represents a ____________________ in the supply of loanable funds.

decrease

If the government changes its tax policy and taxes only real interest payments and not nominal interest​ payments, the equilibrium real interest rate will ___________ and the equilibrium quantity of loanable funds will _____________.

decrease, increase

With the shift in​ supply, the equilibrium quantity of loanable funds ____________.

decreases

With the change in the equilibrium quantity of loanable​ funds, the quantity of saving ________________ and the quantity of investment ____________.

decreases, decreases

The movement from point A to point B represents​

more capital per hour worked