Why Is Economic Growth Important? Flashcards
(5 cards)
Fridays massive earthquake is yet another challenge to Japans recovery but it may provide a jolt to the economy over the short term. Lawrence Summers, president emeritus of Harvard And for former director to WH national economic council, told CNBC. The biggest earthquake in 140 years hit Japan Friday, triggering 10-meter tsunami waves. “If you look, this is clearly going to add complexity to Japans challenges of economic recovery,” Summers said. “It May lead to some temporary increments, ironically, to GDP, as a process of rebuilding takes place.” After the Kobe earthquake in 1995 Japan actually gained some economic strength due to process of reconstruction. Explain, why?
Physical destruction has an opportunity cost. It usually cannot be good for an economy. This is because resources have opportunity costs. In other words, resources dedicated to rebuilding after physical destruction have other uses from which they are diverted
What are the 3 pillars of the economic policy consensus prior to the Global Financial Crisis?
Free competition
Macroeconomic stability
Globalization
What is it about the policy consensus that movements such as “Occupy Wall Street” and “Los Indignados” most object to?
The basis of the objectives seems to be that the benefits of economic growth have not been equally shared. The slogan of the Occupy Wall Street movement is that they represent 99% of the people. This is a reference to the income and wealth of the top 1%. In Europe there has been a long-standing problem with the rate of youth unemployment
In 2009, China had GDP per person of US$5534. In the same year the USA has GDP per person of $36936
If China could grow at a constant real rate of 7% pa, how long would it take China to reach GDP of US $36936 per person
=5534*(1.07)^28
Just over 28 years
In 2009, China had GDP per person of US$5534. In the same year the USA has GDP per person of $36936
If China could grow at a constant real rate of 7% pa and the US at 1% pa in what year would China overtake the US?
Between 32 and 33 years.
32.6
