Assorted Questions and Solutions on Economic Growth

Intermediate Macroeconomics Problems and Solutions - Section 12

See Mr. Stolyarov's complete index of Intermediate Macroeconomics Problems and Solutions here.

Problem 61. Which of these statements is true of Thomas Robert Malthus's views on population growth? More than one of these answers may be possible.

(a) Malthus thought that war was a preventative check on population growth.
(b) Malthus thought that we should embrace the positive checks on population growth - such as diseases and famines - instead of attempting to eliminate them.
(c) Malthus fully anticipated modern technological growth and predicted catastrophic population growth despite improvements in technological productivity.
(d) Malthus believed that food production grew arithmetically, while population grew geometrically, in the absence of positive and/or preventative checks on population growth.
(e) Malthus encouraged population growth so that more geniuses might come about and invent life-enhancing technologies.
(f) Malthus thought that the foremost effect of increases in productivity would be that people would have more children.

Solution 61. The correct statements about Malthus's views are as follows:
(d): Malthus believed that food production grew arithmetically, while population grew geometrically, in the absence of positive and/or preventative checks on population growth.

(f): Malthus thought that the foremost effect of increases in productivity would be that people would have more children.

Problem 62. The developing country of Gricbaxlia has a current per capita GDP of $3400. Due to newly instituted free-market reforms, the annual continuously compounded per capita GDP growth rate in Gricbaxlia is expected to be 5% for the foreseeable future. How long will it take before the Gricbaxlian per capital GDP is $78000?

Solution 62. We use the formula Y = Xe^rt, where r is the annual growth rate, X is the initial GDP, Y is the desired level of GDP, and t is the time it takes for GDP to grow from X to Y. Here, t is our unknown, X = 3400, Y = 78000, r = 0.05.

We rearrange the formula Y = Xe^rt thus:

Y/X = e^rt; rt = ln(Y/X); t = ln(Y/X)/r = ln(78000/3400)/0.05 = t = 62.6586679 years