Principles of Macroeconomics Global Citizens Assignment

ECO 2013 Principles of Macroeconomics Global Citizens Assignment

1. DP: Calculate the values that will fill in the blanks in the shaded areas of the table below (please note that you do not need to reproduce this table, provide the values and identify them clearly):

2. Based on the information in the table and your calculations for Question #1:

Do any countries have positive net exports? ___Yes_______________ Which one(s)? __Brazil, Japan and Norway_______________________________________

Which country has the largest negative net exports? _________US_______________

3. Suppose that one of the countries in the table above asks for your advice about trade. Policymakers in the country want information about the impact of trade on GDP and whether they should be concerned about negative (or positive) net exports. How would you respond?

When exports are more than imports in a particular country, it is a surplus. GDP of a country increases if there is a surplus.  Negative net exports will negatively impact the country’s GDP because of the absence of a balance of Trade. Therefore, policymakers should be concerned about negative or positive exports.

4. Economic growth:Based on information from the World Bank, in 2018, GDP per capita was $62,641.0 in the United States and $77,449.7 in Ireland – very similar values (and relatively high values compared to many countries). But, the annual rate of GDP growth averages 2.2% in the United States and 5.6% in Ireland.

Would you predict the United States or Ireland to have a more rapid increase in the standard of living in the long run? ____Yes_____

Discuss what evidence/theory from Chapter 11 you are using to support this prediction.

GDP measures the economic output per individual in a country. It is the GDP assignment to one person, and hence it measures the standard of living. Since the values are relatively high for the two countries, their standard of living is relatively high. The productivity of a country’s resources determines the standard of living and as measured by GDP per capita. A gradual increase in GDP is a sign of an increase in per capita income and hence rapid increase in the standard of living in the long run.

5. The United Nations Human Development Index (HDI) uses information about a country’s life expectancy at birth (health), expected years of schooling and mean years of schooling (education), and Gross National Income per capita (standard of living) to create a measure that ranges from 1 (very high) to 0 (very low). For 2017, the United States had a value of 0.924, compared to 0.926 for Canada and 0.922 for the United Kingdom – very similar values.

Based on this information, suppose a developing country (such as Afghanistan and Haiti which each had a value of 0.498) asks for your advice on which country it should try to emulate to increase its level of development and economic growth. Which country would you choose? Explain what additional information about each country would be necessary to make this assessment.

HDI index measures the capability of people in a country and not the economic growth of a nation. Countries with the same Gross National Income per capita (standard of living) can have different HDI. HDI does not capture inequality and poverty in an economy and hence not sufficient to measure the level of development and economic growth. The country’s resources, such as capital, human resources, and technology, determine economic development and growth. The USA has the highest GDP among the three countries, which is highly related to economic growth. A developing country should, therefore, emulate the US to increase its level of development and economic growth. We need additional information like  GDP per capita and real GDP to make an assessment further.