MACRO Assignment -

This assignment covers the following topics:

• Unemployment
• Productivity and Growth
• Saving, Investment and Financial System

Short Answer Questions -

Q1. 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 by GDP levels (High-income, Middle-income and Low-income). They are all expressed as real (constant) GDP.

Source: The World Bank.

Throughout this question, assume constant growth rates for each of the country groups that are equal to their average value between year 2000 and 2010 (column 2 of Table). Answer the following questions (show all the calculation steps to get the partial marks):

a) Compute the ratio of GDP per capita of the different income groups in year 2010 (expressed in the one decimal point in %):

i. Middle- to High-income group

ii. Low- to High-income group

iii. Low- to Middle income group

b) Compute the approximate number of years it will take the Low-income and Middle-income countries to double their GDP per capita.

c) Approximate the GDP per capita for High-income, Middle-income and Low-income groups for the year 2088, and fill in column 3 of the Table.

d) Repeat part a) of the question with the computed GDP per capita in year 2088.

e) Now compare your answers in part a) and part d). Comment on any changes occurred between year 2010 and 2088.

Q2. What is the type of unemployment in the following scenario? State the unemployment type and explain in a few sentences why it is the case.

a) After completing a complex computer programming project, Tetsuo got fired from his work. His prospects for a new job requiring a similar set of skills are good, and he has signed up with a job placement service for a programmer. He has declined offers for low-paying jobs.

b) When Akira and his co-workers refused to accept any pay cuts, his employer started to outsource the programming jobs to low-paid workers in another country. This outsourcing is happening throughout the programming industry.

c) Due to the current economic slowdown, Kaneda has been laid off from his programming job. His boss promises to rehire him when business picks up.

3. Before attempting this question, review Week 6 materials.

a) Why do you think the market equilibrium in the loanable funds market maximises efficiency? (2 marks)

b) Suppose that in the next federal budget, the government decides to eliminate all (government) purchases that are financed by borrowing because the politicians worry about a budget deficit. What is wrong with this argument? Briefly discuss using the loanable fund market (no bullet points please). (2.5 marks)

4. Watch the following 10 minute video - What stops population growth?

Summarise the video in minimum of 5 sentences (Not in bullet points, please!). Also, what were the most interesting or surprising facts you learned from this video?

Attachment:- Assignment File.rar