International Trade and Economic Growth Research

International Trade and Economic Growth
Trident University
ECO202: Macroeconomics
International Trade and Economic Growth
(a) If real GDP was $13.1 trillion in 2013 and $13.3 in 2014, what is the growth rate?
The growth rate will be $ 13.3 trillion - $13.1 trillion =0.2 divide by 13.1 x 100= 1.53% (Beggs, 2017).
(b) How many years would it take for GDP (gross domestic product) to double (using your answer from part a)?
To compute the number of years the GDP) will be twice the current year, the 70 rule is used. A simple calculation using the formula below will enable us to know with some precision when the GDP will be twice the current year in terms of growth:
The number of years required to double = 70/ the annual rate of growth of the GDP
In our case this will be =70/1.53=45.75 years (Beggs, 2017). As we can deduce from the above calculation the difference in the growth is actually very small but after some time it compounds to such figures as we can see (Beggs, 2017).
What are the sources of human capital? What are sources of labor productivity? Discuss some specific examples.
The primary sources of human capital include an investment in education, sound health, and on-job training for workers. Parents invest heavily in education for their children with the hope that they will be productive in the future. There is also a hope in their belief that in the coming days, they shall have higher incomes. With regard to the understanding of the growth economy, investing in human capital has the following insinuations: there is a basic assumption that a well-educated person has a brighter future in terms of production that a less educated individual. Secondly, health is of paramount in the sense that they are more productive than sickly or frail persons. This will for sure benefit the national output should we enhance our health as citizens of a given country (gradestack.com, n.d). There is a key reason why it is good to maintain your sound health. In terms of economics, the money that is spent on curing the diseases can be used to help with other development projects that will aid the individual and the national economy. Most governments invest heavily in preventive medicine, especially vaccination, social medicine, which majorly deals with spreading the good gospel about gaining literacy in health soundness and curative medicine for managing the course of the illness. Many firms employ people who have some level of exposure, for instance on-job training for them to minimize the likelihood of spending more on training their human resources. With the right kind of staff to facilitate the requisite duties, labor productivity will be enhanced (gradestack.com, n.d).
What is the law of diminishing returns? Give an example of what the law of diminishing returns implies.
The law of diminishing returns is a terminology used in economics that dwells on three key concepts:
It is not a must that every input unit will translate into an increased output. A good example is that one of a farm that had not fertilizer before. The moment fertilizer is applied for the first time, there is a high probability of a higher yield. But once there is enough of this fertilizer in that firm, it may be counterproductive to increase the fertilizer to the same piece of land. The second assumption is that whenever we increase the inputs there is a likelihood of decreasing the overall production in terms of returns. A good illustration is when we add the 12th pack of fertilizer, the output might be 1kg but the 13th pack will only yield a mere 0.5kg (personalexcellence.co, n.d). So in ...