Self-Check Questions
Using the data provided in Table 18.3, rank the seven regions of the world according to GDP and then according to GDP per capita.
| Population (in millions) | GDP per Capita | GDP = Population × per Capita GDP (in millions) | |
|---|---|---|---|
| East Asia and Pacific | 2,006 | $5,536 | $10,450,032 |
| South Asia | 1,671 | $1,482 | $2,288,812 |
| Sub-Saharan Africa | 936.1 | $1,657 | $1,287,650 |
| Latin America and Caribbean | 588 | $9,536 | $5,339,390 |
| Middle East and North Africa | 345.4 | $3,456 | $1,541,900 |
| Europe and Central Asia | 272.2 | $7,118 | $1,862,384 |
What are the drawbacks to analyzing the global economy on a regional basis?
Create a table that identifies the macroeconomic policies for a high-income country, a middle-income country, and a low-income country.
Use the data in the text to contrast the policy prescriptions of the high-income, middle-income, and low-income countries.
What are the different policy tools for dealing with cyclical unemployment?
Explain how the natural rate of unemployment may be higher in low-income countries.
How does indexing wage contracts to inflation help workers?
Use the AD/AS model to show how increases in government spending can lead to more inflation.
Show, using the AD/AS model, how monetary policy can be used to decrease the price level.
What do international flows of capital have to do with trade imbalances?
Use the demand-and-supply of foreign currency graph to determine what would happen to a small, open economy that experienced capital outflows.