30. Scenario: Capital An economy initially has 200 units of physical capital per worker. Each year it increases the amount of physical capital by 10%. According to the aggregate production function for this economy, each 1% increase in physical capital per worker, holding human capital and technology constant, increases output per worker by 0.25%. Reference: Ref 9-14 (Scenario: Capital) Look at the scenario Capital. If there is no inflation and output per worker is initially $1,000, what does the estimated output per worker equal after one year? $1,225 $2,500 $1,250 $1,025

$1,025

Explanation:

An economy initially has 200 units of physical capital per worker.

Each year it increases the amount of physical capital by 10%.

Each 1% increase in physical capital per worker, holding human capital and technology constant, increases output per worker by 0.25%.

Therefore 10% increase, increases output per worker by 2.5%.

If output is initially $1,000, then the estimated output per worker after one year equal $1000 x 1.025 =  $1,025

answer: b) the us is the leading importer but not the leading exporter.

extra info:

the u.s is the largest importer but it is not the largest exporter as china sits on the top of the table when it comes to leading exporters.

but u.s is not far from first,

they rank in 2nd globally as the worlds largest exporter.

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