The People's Republic of China has an estimated $101.54 trillion of capital with a depreciation rate of 5.2% per year. If its GDP is $20.5 crillion and its saving rate is 45% would we expect China's GDP to be growing or shrinking? O growing, I> dK O growing, I< dK O shrinking, I> dK O shrinking, I< dK QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.89% to $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use, Y = AKU.4L0.6, and to estimate China's final GDP (in trillions of $s) and then calculate the
The People's Republic of China has an estimated $101.54 trillion of capital with a depreciation rate of 5.2% per year. If its GDP is $20.5 crillion and its saving rate is 45% would we expect China's GDP to be growing or shrinking? O growing, I> dK O growing, I< dK O shrinking, I> dK O shrinking, I< dK QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.89% to $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use, Y = AKU.4L0.6, and to estimate China's final GDP (in trillions of $s) and then calculate the
Chapter7: Economic Growth: Theory And Policy
Section: Chapter Questions
Problem 3DQ
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The contribution of capital is 0.4 and it would affect the GDP accordingly. The rise in capital stock is positive, thus we can conclude that GDP would definitely rise.
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