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Economics

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A nations capital goods wear out over time, so a portion of it's capital goods become unusable every year. Last year, its residents decided to produce no capital goods, It has experienced no growth in its population or in the amounts of other productive resources during the past year. In addition, the nation's technology and resources productivity have remained unchanged during the past year. Will the nation's economic growth rate for the current year be negative, zero, or positive?

  • Economics -

    This is definitely not my field of expertise but it's an interesting question! First of all, what exactly is meant by "economic growth?"

    Economic growth is a term used to indicate the increase of per capita gross domestic product (GDP) or other measure of aggregate income. It is often measured as the rate of change in GDP. Economic growth refers only to the quantity of goods and services produced.

    Now you say there are no additional capital goods, no additional population and technology and resources productive is unchanged.

    All I can say is that there should still be some increase in demand as the capital goods wear out and no doubt will be replaced.

    So "supply and demand" makes sense to me but now it's up to you with the economic growth rate!

    Sra (aka Mme)

    P.S. I certain hope the economist will answer this one!

  • Economics -

    it would be negative

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