ECON 110 Connect Homework 8 Economic Growth International Trade Assignment solution complete answers

ECON 110 Connect Homework 8 Economic Growth International Trade Assignment solutions complete answers 

 

Question 1

The Rule of 72

Small differences in annual growth rates cumulate into large differences in GDP. Shown here are the number of years it would take to double GDP at various growth rates.

Doubling times can be approximated by the rule of 72. Seventy-two divided by the growth rate equals the number of years it takes to double.

According to the rule of 72, how many years will it take for GDP to double if GDP growth is

 

Question 2

In 2018, approximately 61 percent of the adult population (260 million) was employed.

If the employment rate increased to the year 2000 level of 64 percent,

a. how many more people would be working? 

b. by how much would output increase if GDP per worker was $100,000? 

 

Question 3

According to the table, by what percentage did GDP per capita increase between 1820 and 1995 in

 

Question 4

a. If a Swiss and an American both had $100, how many more dollars would the    Swiss save in 2017?

b. Why are higher saving rates desirable?

Higher savings lead to     investment and     economic growth.

 

Question 5

Suppose that every additional 3 percentage points in the investment rate boosts GDP growth by 1 percentage point.

Assume also that all investment must be financed with consumer saving.

Note: Investment rate = Investment/GDP

The economy is currently characterized by

If the goal is to raise the growth rate by 1 percentage point,

a. by how much must investment increase? 

b. by how much must consumption decline? 

 

Question 6

Given the following domestic supply and demand information, graph domestic supply and demand and then answer three questions about trade and trade barriers. 

Graph these market conditions.

Instructions: Use the tools provided 'S' and 'D' to plot the domestic supply and demand curves (plot 8 points for each curve, 16 points total).

a. Identify when there is an absence of trade: (i) the market price, (ii) domestic consumption, and (iii) domestic production.

i. Market price 

ii. Domestic consumption 

iii. Domestic production 

b. Now suppose that foreigners enter the market, offering to sell an unlimited supply of T-shirts for $7 apiece. Now with free trade, identify (i) the market price, (ii) domestic consumption, and (iii) domestic production.

i. Market price 

ii. Domestic consumption 

iii. Domestic production 

c. If a tariff of $2 per T-shirt is imposed, with this trade barrier, identify (i) the market price, (ii) domestic consumption, and (iii) domestic production.

i. Market price 

ii. Domestic consumption 

iii. Domestic production 

 

Question 7

World travelers have discovered that Big Macs taste pretty much the same everywhere, but a Big Mac’s price can vary tremendously. If you want a Big Mac in a foreign country, you need to figure out foreign prices.

Use the following data related to the price of Big Macs and exchange rates around the world to see where the Big Mac was more or less expensive in 2015.

a. Calculate the dollar price of a Big Mac in each of the following countries:

b. The U.S. dollar price of a Big Mac was the highest in    .

 

Question 8

Refer to the News Wire and answer one question.

NEWS WIRE
CURRENCY APPRECIATION
Paris Just Got Cheaper for American Tourists

Paris, France. Americans may discover some bargains in Paris this summer. Since the beginning of the year, the U.S. dollar has strengthened considerably, making everything in Paris a bit cheaper. In February a dollar bought 0.80 euros; today, the same dollar is worth 0.88 euros. What does that mean for American tourists? Admission to the Eiffel Tower still costs 10 euros, but the dollar price has dropped from $12.50 to $11.36. Tickets to the Louvre museum (15 euros) have fallen from $18.75 to $17.05 for American tourists. And for big spenders, the fixed price of the gourmet lunch at Le Cinq has fallen from $250 to a mere $227. Vive la Paris!

By what percent did the dollar price of a euro fall between February and August 2018?

 

Question 9

Refer to the News Wire and answer the questions that follow.

NEWS WIRE
CURRENCY APPRECIATION
Paris Just Got Cheaper for American Tourists

Paris, France. Americans may discover some bargains in Paris this summer. Since the beginning of the year, the U.S. dollar has strengthened considerably, making everything in Paris a bit cheaper. In February a dollar bought 0.80 euros; today, the same dollar is worth 0.88 euros. What does that mean for American tourists? Admission to the Eiffel Tower still costs 10 euros, but the dollar price has dropped from $12.50 to $11.36. Tickets to the Louvre museum (15 euros) have fallen from $18.75 to $17.05 for American tourists. And for big spenders, the fixed price of the gourmet lunch at Le Cinq has fallen from $250 to a mere $227. Vive la Paris!

If an admission ticket to Disney World in Florida cost $116, what was the euro price of the ticket in

 

Question 10

Policy Perspectives Using supply and demand, illustrate the effect of a "Buy American" policy.

Instructions: For each graph, drag and drop either the demand or supply curve to a new position to illustrate the effect of a "Buy American" policy on the market for American-made products and foreign-made products, respectively. Shift only one curve per graph.