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1、Chapter7
2、EconomicGrowth85Chapter7EconomicGrowthQuestions1.ReferringtoExhibit7.5,istheGDPpercapitainSouthKorealikelytodrawlevelwithU.S.GDPpercapitainthefuture?Answer:Yes,SouthKoreaislikelytodrawlevelwithU.S.GDPpercapitainthefuturebecausein1960,theshareofGDPpercapitaofS
3、outhKoreatoU.S.was0.1whileitroseto0.6in2010.A-head:THEPOWEROFECONOMICGROWTHConcept:Economicgrowth2.AlthoughSingapore’sGDPpercapitawaslowwhencomparedwiththeU.S.inthe1960s,basedonExhibit7.7,weexpectSingaporetocatchupwithmoretechnologicallyadvancedcountries.Why?Answer:Al
4、thoughSingaporeinitiallyhadalowlevelofincomepercapita,ithasrecordedstrongeconomicgrowthof5percentcomparedtotheU.S.’sloweconomicgrowthof2to3percent.ThissuggestsaconvergenceofincomepercapitabetweentheU.S.andSingaporeinthefuture.A-head:THEPOWEROFECONOMICGROWTHConcept:Cat
5、ch-upgrowth,sustainablegrowth3.Accordingtotheaggregateproductionfunction,howdoesGDPincrease?Answer:TheaggregateproductionfunctionY=A×F(K,H)linksaggregateoutputtophysicalcapital(K),totalefficiencyunitsoflabor(H),andtechnology(A).ToincreaseGDPoraggregateincome,anationca
6、nincreaseitsstockofphysicalcapital,K;increasethehumancapitalofitsworkers,H(sothatithasgreaterefficiencyunitsoflaborforthesameworkforce);orimproveitstechnology,A.A-head:HOWDOESANATION’SECONOMYGROW?Concept:Aggregateproductionfunction,economicgrowth4.Thechapteremphasizes
7、theimportanceofsavingineconomicgrowth.a.Howisthesavingrateinaneconomydefined?b.Whatfactorshelphouseholdsdecidewhethertoconsumeorsavetheirincome?c.Howdohouseholdsavingdecisionsimpactinvestmentintheeconomy?Answer:a.Thesavingrateisthefractionoftotalincomethathouseholdssa
8、ve.A-head:HOWDOESANATION’SECONOMYGROW?Concept:Savingrate©2015PearsonEducation,Inc.Chapter7
9、EconomicGrowth85b.Savingisawayofallocatingsomeoftoday’sresourcesforconsumptiontomorrow.So,indecidinghowmuchtosave,householdsaretradingoffconsumptiontodayforconsumptiontomorrow.T
10、hesechoicesareaffectedbyseveralfactors:Thefirstoneistheinterestrate.Theinterestratedetermineshowmuchhouseholdswillearnonthei
