Author Question: When considering the aggregate demand curve, the wealth effect, interest rate effect and effects ... (Read 102 times)

neverstopbelieb

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When considering the aggregate demand curve, the wealth effect, interest rate effect and effects from international trade reinforce each other.
 
  Indicate whether the statement is true or false

Question 2

Suppose that one country has a GDP that is ten percent of its richer neighbor, but the poorer country is growing at a rate of eight percent per year while the richer country is growing at a rate of two percent per year.
 
  Which country will be richer in 60 years?


yeungji

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Answer to Question 1

TRUE

Answer to Question 2

Using the rule of 70, it can be shown that the poor country will be richer in 60 years. The poor country's GDP will have doubled more than six times over this period, while the rich country's GDP will not have even doubled twice. So while the poor country might have started slowly, it is much richer than the rich country by 60 years later



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