You Are Asked to Make Comparisons of Two Pairs of Countries.The

question 65

Essay

You are asked to make comparisons of two pairs of countries.The first pair are the Latin American countries of Chile and Argentina;the second pair are France and Germany.You are given the following information: the average saving rate in Argentina is 13.4 percent,in Chile it is 21.3 percent,in France it is 22 percent,and in Germany,20.3 percent.Assuming the countries are identical in every other way,which country would the Solow model predict to have the higher per capita real GDP? However,you find out the steady state real per capita GDP in each of the 1.To the instructor,these are not actual steady states,but rather RPCGDP in 2007;these numbers are used for illustrative purposes only.countries is $16,500 in Argentina,$21,548 in Chile,$31,446 in France,and $33,181 in Germany.What is the primary factor which the simple Solow model uses to describe these differences? Give an example.

---

Definitions:

Resource Markets

Economic markets where the inputs for the production process (e.g., labor, land, capital) are bought and sold, determining factor prices based on supply and demand.

Income Distribution

How a nation’s total GDP is distributed amongst its population.

ATMs

Automated Teller Machines that allow customers to undertake financial transactions, notably cash withdrawals, without the need for a human clerk or bank teller.

Bank Tellers

Employees at financial institutions who deal directly with customers, handling routine banking transactions.