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# Macroeconomics - Essay Example

Summary
According to (Krugman and Wells 242) the real gross domestic product (GDP) is a reflection of the living standards of the people in a particular country. Therefore, from the above tables it is noted that Argentina had experienced the least growth of 91.6% in its living standards…

## Extract of sample "Macroeconomics"

Answers to question1 and 7 Introduction This present paper spells out short answers to question and 7 that were under the problem section in chapter 9.
The formula used to complete the table is; each year’s real GDP per capita/ 1960 or 2009 level *100
Argentina
Ghana
Year
Real GDP per capita (2005 \$)
% 1960 real GDP per capita
% 2009 real GDP per capita
Year
Real GDP per capita (2005 \$)
% 1960 real GDP per capita
% 2009 real GDP per capita
1960
\$6243
100
52.2
1960
\$603
100
48.6
1970
\$7810
125.1
65.3
1970
\$939
149.8
75.8
1980
\$8638
138.4
72.2
1980
\$807
133.8
65.1
1990
\$6823
109.2
57
1990
\$844
139.9
68.1
2000
\$9172
146.9
76.6
2000
\$887
147.1
71.6
2009
\$11961
191.6
100
2009
\$1239
205.5
100
South Korea
United States
Year
Real GDP per capita (2005 \$)
% 1960 real GDP per capita
% 2009 real GDP per capita
Year
Real GDP per capita (2005 \$)
% 1960 real GDP per capita
% 2009 real GDP per capita
1960
\$1782
100
7.1
1960
\$15438
100
37.6
1970
\$3018
169.4
12.1
1970
\$20480
132.7
49.8
1980
\$5339
299.6
21.3
1980
\$25090
162.5
61.4
1990
\$11437
641.8
45.7
1990
\$31637
204.9
77
2000
\$18926
1062.1
75.6
2000
\$39175
253.8
95.3
2009
\$25029
1404.5
100
2009
\$41102
266.2
100
According to (Krugman and Wells 242) the real gross domestic product (GDP) is a reflection of the living standards of the people in a particular country. Therefore, from the above tables it is noted that Argentina had experienced the least growth of 91.6% in its living standards since 1960, while Ghana had experienced a growth of 105.5% since 1960. On the other hand South Korea recorded the most impressive growth in its livings standards since 1960 because it posted a growth of 1304.5%, while the United States posted a growth of 166.2% since 1960.
In reference to the studies conducted by (Krugman and Wells 254) the differences noted above in terms of growth of the livings standards can be attributed to differences in the level of each country’s physical capital which is mainly determined by a country’s level of savings and investment. Secondly, the differences can be attributed to differences in education levels of each country, the technological progress, government policies and the level of political stability that is experienced in each country.
First it is important to note that long run economic growth depends solely on productivity, which is mainly influenced by physical capital, human capital and technology (Krugman and Wells 246-247).
Physical capital such as office space and machineries influence long-run economic growth of aggregate output per capita by increasing the productivity of a worker. Human capital also influence long-run economic growth of aggregate output per capita since a well educated and highly trained employee will offer more competitive advantage and increase the value of labor. Thirdly technology influence long-run economic growth of aggregate output per capita by increasing efficiency and effectiveness of production whilst reducing the operating cost. Lastly, according to (Krugman and Wells 251) natural resources do not necessarily influence the long-run economic growth of aggregate output per capita in today’s World as it did in the past centuries. However, it is of essence to note that natural resources have the potential of increasing a country’s foreign exchange income thus influence the long run economic growth of a country that is endowed with natural resources such as mineral deposit and abundant farmland.
Work cited
Krugman Paul and Wells Robin., Macroeconomics. New York, Worth Publishers, 2009 Print Read More
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