How can we measure growth over the very long run? Te poorest countries in the world have a per capita income of about $600 today. We can reason-ably assume that it is nearly impossible to live on an income below half this level (below $300). Per capita income in the United States in 2015 was about$51,000. With this information in mind, consider the following questions.(a) For how long is it possible that per capita income in the United Stateshas been growing at an average annual rate of 2% per year?(b) Some economists have argued that growth rates are mismeasured. Forexample, it may be difcult to compare per capita income today with percapita income a century ago when so many of the goods we can buy todaywere not available at any price then. Suppose the true growth rate in thepast century was 3% per year rather than 2%. What would the level of percapita income in 1800 have been in this case? Is this answer plausible?
How can we measure growth over the very long run? Te poorest countries
in the world have a per capita income of about $600 today. We can reason-
ably assume that it is nearly impossible to live on an income below half this
level (below $300). Per capita income in the United States in 2015 was about
$51,000. With this information in mind, consider the following questions.
(a) For how long is it possible that per capita income in the United States
has been growing at an average annual rate of 2% per year?
(b) Some economists have argued that growth rates are mismeasured. For
example, it may be difcult to compare per capita income today with percapita income a century ago when so many of the goods we can buy today
were not available at any price then. Suppose the true growth rate in the
past century was 3% per year rather than 2%. What would the level of per
capita income in 1800 have been in this case? Is this answer plausible?
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