Answer to Question #282471 in Macroeconomics for ABEX

Question

10. Distinguish between growth correlates and fundamental causes of growth.

11. Discuss how history, and aspiration failure explain differences in the

trajectory of economic growth of economies.

12. Consider two cultures X and Z. In culture X, parents live for their children and grandchildren where their current income is divided among

current consumption, saving for retirement, and investment in the education of their children. In culture Z, children are born as assets for

their parents so that the current generation expects to be taken care of by the future generation. Output produced by the younger generation is divided into proceed and bequest for parents, and investment

for future self-sufficiency.

(a) What is the direction of flow of resource of investment in the two

cultures?

Answer 1

10. Fundamental causes of prosperity are factors that are at the root of the differences in the proximate causes of prosperity.

11. Aspirations failure is defined as the failure to aspire to one's own potential. Aspirations failure is a consequence of poverty, rather than a cause.

12. (a) The direction of flow of resource of investment in the two cultures is opposite, because X invests into the future, but Z invests into the current well-being.