interesting math

Discussion in 'Business & Economics' started by squid, Mar 1, 2004.

  1. squid Registered Senior Member

    Messages:
    56
    Hello, I'm stuck on this problem:

    A small island nation is endowed with indestructible cocunut trees. These trees live forever and no new trees can be planted. Every year $1 million worth of cocunuts fall off the trees and can be eaten locally or exported to other countries. In past years the island nation ran current account surpluses and capital and financial deficits, acquiring foreign bonds. It now owns $500,000 of foreign bonds. The interest rate on these bonds is 5% per year. The residents of the island nation consume $1,025,000 per year.

    What are the values of investment, national saving, the current account balance, the capital and fiancial acount balance, net exports, GDP, and GNP in this country?

    Thanks.
     
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  3. Pete It's not rocket surgery Registered Senior Member

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    10,167
    I think you're looking for an Economics forum.

    I don't think this is hard - how far have you got so far, and where are you getting stuck?
     
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  5. Pete It's not rocket surgery Registered Senior Member

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    10,167
    Here's a start -
    GDP is $1,000,000 (coconut production)
    GNP is GDP + 5% of $500,000 (foreign factor income) = $1,025,000
     
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  7. squid Registered Senior Member

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    56
    Well, I don't even know where to begin. It seems that your answer for the GDP and GNP sounds good. But now, I'm stuck with figuring out what the values of investment, national saving, the current account balance, the capital and fiancial acount balance, and net exports.
     
  8. Pete It's not rocket surgery Registered Senior Member

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    10,167
    Have you looked up the definitions of those terms in your text?
    How far have you got?
    Let's start with the last one - net exports.
    What is the definition of "Net Exports"?
     
  9. squid Registered Senior Member

    Messages:
    56
    Only some.
    Not very far, maybe a little step.
    Net Exports = exports of goods and services minus imports of goods and services.
     
  10. Pete It's not rocket surgery Registered Senior Member

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    10,167
    Right. So we need to know exports and imports, right? Well, not quite. We only need to know the difference between them.

    The island is producing $1,000,000 in exportable or consumable goods each year, and earning $25,000 each year on top. The islanders are consuming $1,025,000 each year.

    Now, the total consumption ($1,025,000) must be the sum of imports plus consumption of dometic goods, right?

    And the total domestic production ($1,000,000) must be the sum of exports plus consumption, right?

    Now, try putting in some numbers... what happens if exports are zero, and all coconuts are consumed domestically? How much must be imported to meet total consumption? What's the difference between imports and exports?

    What if all coconuts are exported? How much must be imported to meet total consumption now? What's the difference between imports and exports in this case?

    What if x coconuts are exported?
     
  11. squid Registered Senior Member

    Messages:
    56
    I dunno what to do...I guess I'll just postpone on working on this problem.
     
  12. Pete It's not rocket surgery Registered Senior Member

    Messages:
    10,167
    Ask for some help. Got any brainy friends?
    How about someone who did the course last year?
     
  13. squid Registered Senior Member

    Messages:
    56
    I would ask for some help but my ego tells me to not to.
     
  14. Pete It's not rocket surgery Registered Senior Member

    Messages:
    10,167
    Your ego is killing you.
     
  15. squid Registered Senior Member

    Messages:
    56
    well the thing is the people who know this stuff seems snobbish.

    so, how would i approach and ask a snob a question?
     
  16. Pete It's not rocket surgery Registered Senior Member

    Messages:
    10,167
    You say "Im stuck on this problem. Can you help me out?"
    Asking your teacher for help is also a good idea.
     
  17. squid Registered Senior Member

    Messages:
    56
    swallowing my pride is a hard thing to do.
     
  18. Pete It's not rocket surgery Registered Senior Member

    Messages:
    10,167
    Conquer your fears!

    *Chanelling Yoda*
    Mmmm... Fear is strong in you...
    Fear leads to hate, hate leads to the dark side of the force...
    That is why you fail.

    *Chanelling Frank Herbert*
    I will not fear
    Fear is the mindkiller,
    Fear is the little death
    That brings total Oblivion
    I will permit my fear to pass
    Over me and through me
    And where it has gone
    I will turn the inner eye
    Nothing will be there
    Only I will remain.
     
  19. squid Registered Senior Member

    Messages:
    56
    interesting...what's the success rate of that yoda method?

    Please Register or Log in to view the hidden image!

     
  20. squid Registered Senior Member

    Messages:
    56
    need help on this problem:

    Over the past 20 years an economy's total output has grown from 1000 to 1300, its capital stock has risen from 2500 to 3250, and its labor force has increased from 500 to 575. All measurements are in real terms. Calculate the contributions to economic growth of growth in capital, labor, and prodictivity.

    a. assuming that aK = 0.3 and aN = 0.7
    b. assuming that aK = 0.5 and aN = 0.5
     
  21. Pete It's not rocket surgery Registered Senior Member

    Messages:
    10,167
    Come on, squid, you need to show us that you've made some effort before we do your homework for you.

    What are your thoughts on the problem so far?
     
  22. squid Registered Senior Member

    Messages:
    56
    what i got so far:

    a)
    output = 1300/1000 = 1.3. 1.3 - .39 - .85 = .105%
    capital = 3250/2500 = 1.3(.3) = .39%
    labor = 525/500 = 1.15(.7) = .805%
     
  23. squid Registered Senior Member

    Messages:
    56
    stuck on this problem:

    How do legal restrictions on practice for nurses and physicians tend to affect the observed elasticities of substitution? Would they tend to be higher if legal restrictions were removed? Would quality of care be affected?
     

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