Impact of returning of workers to home country upon the macro economy.
1. The following information has been discovered about the economy of Longland:
| Capital |
Real GDP |
| (per hour of labor) |
(per hour of labor) |
| 2000 dollars |
2000 dollars |
| 10 |
3.8 |
| 20 |
5.7 |
| 30 |
7.13 |
| 40 |
8.31 |
| 50 |
9.35 |
| 60 |
10.29 |
| 70 |
11.24 |
| 80 |
11.94 |
a.Does this economy conform to the one third rule? If so, describe why. If not, describe why not and describe what rule, if any, it does conform to.
b. Elucidate how you would do the growth accounting for this economy.
2. If the US cracks down on illegal immigrants and returns millions of workers to their countries of origin, describe what will happen to
a.US potential GDP
b.US employment
c. The US real wage rate
d. In the countries to which the immigration return, describe what will happen to
e. Potential GDP
f. Employment
g. The real wage rate
3. Elucidate the processes that will bring the growth of real GDP per person to a stop according to
a.Classical growth theory
b. Neoclassical growth theory
c. New growth theory