MACRO1 ECON1010 - Assignment
Added on 2020-07-22
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MACRO1 (ECON1010) READ THE FOLLOWING FIRST (Very Important)1.This project contributes to 20% of the overall marks for the course. 2.Use and Submit this template only and Write your answers in eachquestion below for your submission 3.The font size has to be at least 12.4.Explain your answers, but be succinct. 5.Label each axis and explain the diagram that you use carefully (if any). 6.Show all of your working Page 1 of 8
Short Answer Questions (answer in the space provided below):1.The following table depicts statistics on GDP per capita (ie, GDP/population)in column (1) and its growth rate for the country groups (column 2) defined byGDP levels (High-income, Middle-income and Low-income). They are allexpressed as real (constant) GDP. (1)(2)(3)Country groupGDP per capita (Year2010)Average annual growth rate of realGDP per capita (Year 2000-2010)GDP per capita(Year 2088)High-income38,2930.9%?Middle-income3,9804.8%?Low-income5073.0%?1.Source: The World Bank,http://databank.worldbank.org/data/reports.aspx?source=world-development-indicatorsThroughout this question, assume constant growth rates for each of the countrygroups that are equal to their average value between year 2000 and 2010(column 2 of Table). Answer the following questions (show all the calculationsteps to get the partial marks):a)Compute the ratio of GDP per capita of the different income groups inyear 2010 (expressed in the one decimal point in %): (1.5 mark, 0.5each)i.Middle- to High-income groupii.Low- to High-income groupiii.Low- to Middle income groupb)Compute the approximate number of years it will take the Low-incomeand Middle-income countries to double their GDP per capita. (1 mark)c)Approximate the GDP per capita for High-income, Middle-income andLow-income groups for the year 2088, and fill in column 3 of the Table.(1.5 mark, 0.5 each)d)Repeat part a) of the question with the computed GDP per capita in year2088 (1.5 mark, 0.5 each)e)Now compare your answers in part a) and part d). Comment on anychanges occurred between year 2010 and 2088. (2 mark) Page 2 of 8
(Answers)a.Middle-income to high income3980 / 38293= 0.1 or 10%Low income to high507 / 38293= 0.01 or 1%Low income to middle507 / 3980= .13 or 13%b.As per rule 70 of macro-economics CountriesOutcome Low-income70 / 3= 23.3 years Middle-income70 / 4.8= 14.6 years c.High income countries = 70 / .9= 78 years On the basis of this, high income countries will take 78 years to double their GDP suchas $76586 respectively. Middle-income group = 78 / 14.6= 5.3 times Hence, at the end of 2088, GDP per capita of middle-income group country willaccount for $165568 significantly. Lower-income countries = 78 / 23.3= 3.3 timesBy doing evaluation, it has found that in the year of 2088, GDP per capita oflower-income countries will be $5273.Page 3 of 8
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