What accounts for differences in living standards between rich and poor countries today?
What will be an ideal response?
The differences found in the standards of living of present rich and poor countries are simply the result of modern economic growth. Rich countries have been able to increase the amount of output per person available to their citizens while poor countries have experienced stagnant or declining shares of per capital output. For example, in the year 2011 the citizens of the United States enjoyed a GDP per person of about $48,000, while in 2011 the people of Zimbabwe experienced a much lower level of output per person of $752.
You might also like to view...
As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by John Taylor on the effect of fiscal policy since the year 2000 suggests that
A) the multiplier effect of fiscal policy is much less than that for monetary policy. B) temporary fiscal policy financed through government borrowing implies a multiplier value between 0.8 and 1.5. C) fiscal policy has little effect on the economy and that the multiplier value is effectively zero. D) statistical models are inadequate to determine the multiplier and the multiplier value likely varies based on the state of the economy.
If the exchange rate is defined as the price of the foreign currency in terms of the domestic currency, an increase in the exchange rate:
a. increases domestic demand for foreign goods. b. makes domestic goods cheaper in the foreign markets. c. lowers net exports. d. lowers aggregate expenditure on domestic goods. e. increases the domestic country's external debt burden.