Questions for Review：

1. What does the level of a nation’s GDP measure? What
does the growth rate of GDP measure? Would you
rather live in a nation with a high level of GDP and a
low growth rate, or in a nation with a low level and a
high growth rate?

答案：an economy’s gross domestic product(GDP) measures both the total income earned in the economy and the total expenditure on the economy’s output of goods and services. The level of real GDP is a good gauge of economic prosperity, and the growth of real GDP is a good gauge of
economic progress.I'd rather live in a nation with high level of GDP and a low growth rate because high level of GDP is a kind of guarantee of relatively high level of living standard.

2. List and describe four determinants of productivity.

答案：physical capital, human capital, natural resources, and technological knowledge available to workers.

3. In what way is a college degree a form of capital?

答案：Human capital is the economist’s term for the knowledge and skills that workers acquire through education, training, and experience.Like physical capital, human capital raises a nation’s ability to produce goods and services. Also like physical capital, human capital is a produced factor of production.Producing human capital requires inputs in the form of teachers, libraries,
and student time. Indeed, college students can be viewed as “workers” who have the important
job of producing the human capital that will be used in future production.

4. Explain how higher saving leads to a higher standard of
living. What might deter a policymaker from trying to
raise the rate of saving?

答案：Because capital is a produced factor of production, a society can change the amount of capital it has. If today the economy produces a large quantity of new capital goods, then tomorrow it will have a larger stock of capital and be able to produce more of all types of goods and services. Thus, one way to raise future productivity is to invest more current resources in the production of capital.But for society to invest more in capital, it must consume less and save more of its current income. The growth that arises from capital accumulation is not a free lunch: It requires that society sacrifice consumption of goods and services in the present in order to enjoy higher consumption in the future, which might deter a policymaker from trying to raise the rate of saving. 

5. Does a higher rate of saving lead to higher growth
temporarily or indefinitely?

答案：The traditional view of the production process is that capital is subject to diminishing returns: As the stock of capital rises, the extra output produced from an additional unit of capital falls.Because of diminishing returns, an increase in the saving rate leads to higher growth only for a while.So higher rate of saving lead to higher growth temporarily.

6. Why would removing a trade restriction, such as a tariff,
lead to more rapid economic growth?

答案：Most economists today believe that poor countries are better off pursuing outward-oriented policies that integrate these countries into the world economy. Chapters 3 and 9 showed how international trade can improve the economic wellbeing of a country’s citizens. Trade is, in some ways, a type of technology.A country that eliminates trade restrictions will, therefore, experience the same kind of economic growth that would occur after a major technological advance.

7. How does the rate of population growth influence the
level of GDP per person?

答案：Standard theories of economic growth predict that high population growth reduces GDP per person. The reason is that rapid growth in the number of workers forces the other factors of production to be spread more thinly.In particular,when population growth is rapid, equipping each worker with a large quantity of capital is more difficult. A smaller quantity of capital per worker leads to lower productivity and lower GDP per worker.

8. Describe two ways in which the U.S. government tries
to encourage advances in technological knowledge.

答案：The government continues to encourage advances in knowledge with research grants from the National Science Foundation and the National Institutes of Health and with tax breaks for firms engaging in research and development.Yet another way in which government policy encourages research is through the patent system.

Problems and Applications：

1. Most countries, including the United States, import
substantial amounts of goods and services from other
countries. Yet the chapter says that a nation can enjoy a
high standard of living only if it can produce a large
quantity of goods and services itself. Can you reconcile
these two facts?

答案：Trade is, in some ways, a type of technology.A country that eliminates trade restrictions will, therefore, experience the same kind of economic growth that would occur after a major technological advance.Without being able to take advantage of the gains from trade, a country would need to produce all the goods it consumes.It would also have to produce all its own capital goods, rather than importing state-of-the-art equipment from other cities. Living standards in that country would fall immediately, and the problem would likely only get worse over time.So trade will improve a country's productivity and thus make the nation enjoy high standard of living.

2. List the capital inputs necessary to produce each of the
following:
a. cars
b. high school educations
c. plane travel
d. fruits and vegetables

答案：physical capital, human capital, natural resources, and technological knowledge are four determinants of productivity, all of which are the capital input needed for production. I will answer this question according to these four elements of productivity.

a. workshop & work tools; skilled workers; land, water& steel; assembly lines & management systems;

b. classroom; teachers; campus;textbook;

c. plane; pilot & Stewardess; airport; air trafic control system & communication system.

d. tools & fertilizer; farmer; land, water & seed; agricultural technology;

3. U.S. income per person today is roughly eight times
what it was a century ago. Many other countries have
also experienced significant growth over that period.
What are some specific ways in which your standard of
living differs from that of your great-grandparents?

答案：Our standard of living differs in many ways from that of my great-grandparents.Firstly we enjoy sufficient food supply and have more than enough clothes;Secondly we have improved social welfare system like medical, education, transportation and other infrastructure; thirdly we benefit from advanced technology which my great-grandparents could never dream of. Despite all these above mentioned benefits we now have a deteriorated environment and can not enjoy the fresh air, clear water and cool breeze brought by the tree shadow which my great-grandparents took for granted. 

4. The chapter discusses how employment has declined
relative to output in the farm sector. Can you think of
another sector of the economy where the same
phenomenon has occurred more recently? Would you
consider the change in employment in this sector to
represent a success or a failure from the standpoint of
society as a whole?

答案：(未完待续）

5. Suppose that society decided to reduce consumption
and increase investment.
a. How would this change affect economic growth?
b. What groups in society would benefit from this
change? What groups might be hurt?

答案：Because resources are scarce, devoting more resources to producing capital requires devoting fewer resources to producing goods and services for current consumption. That is, for society to invest more in capital, it must consume less and save more of its current income. The growth that arises from capital accumulation is not a free lunch: It requires that society sacrifice consumption of goods and services in the present in order to enjoy higher consumption in the future.

a. Because capital accumulation affects productivity so clearly and directly, many economists believe that high investment leads to more rapid economic growth.

b. Because to reduce consumption and increase investment requires that society sacrifice consumption of goods and services in the present in order to enjoy higher consumption in the future. So the younger generation will benefit from this change and the current generation will do the sacrifice. Like in China, 30 years ago when my parents were working hard with only RMB 30-40 per month and limited goods and service for consumption and now in return we younger generation can enjoy much higher living standard and consumption.