Self-Check Questions


Using the data provided in Table 18.3, rank the seven regions of the world according to GDP and then according to GDP per capita.

Population (in millions) GDP per Capita GDP = Population × per Capita GDP (in millions)
East Asia and Pacific 2,006 $5,536 $10,450,032
South Asia 1,671 $1,482 $2,288,812
Sub-Saharan Africa 936.1 $1,657 $1,287,650
Latin America and Caribbean 588 $9,536 $5,339,390
Middle East and North Africa 345.4 $3,456 $1,541,900
Europe and Central Asia 272.2 $7,118 $1,862,384
Table 18.3 GDP and Population of Seven Regions of the World

What are the drawbacks to analyzing the global economy on a regional basis?


Create a table that identifies the macroeconomic policies for a high-income country, a middle-income country, and a low-income country.


Use the data in the text to contrast the policy prescriptions of the high-income, middle-income, and low-income countries.


What are the different policy tools for dealing with cyclical unemployment?


Explain how the natural rate of unemployment may be higher in low-income countries.


How does indexing wage contracts to inflation help workers?


Use the AD/AS model to show how increases in government spending can lead to more inflation.


Show, using the AD/AS model, how monetary policy can be used to decrease the price level.


What do international flows of capital have to do with trade imbalances?


Use the demand-and-supply of foreign currency graph to determine what would happen to a small, open economy that experienced capital outflows.