Question

Place each statement in the appropriate category. GDP grows faster GDP grows slower Answer Bank with labor mobilitywhen consumption is a large fraction of GDP when rule of law is applied equally and generally respected with technological progress during war when children go to work instead of school with inadequate public health

Answer 1

GDP will grow at a faster rate when

• Consumption is a larger fraction of GDP which means fluctuations in the GDP are reduced
• Rule of law is applied equally so that property rights are enforced and defined properly
• There is a technological progress in the economy which increases the productivity of resources
• Labour is mobile so that equally productive labour can be accumulated everywhere

GDP will not grow at a faster rate when

• There is an inadequate public health which decreases the productivity of workers
• Children are not educated and are working for most of the time
• There is a war and hence a destruction of the property.