CHAPTER 19
ECONOMIC DEVELOPMENT
SOLUTIONS TO END OF CHAPTER PROBLEMS
1. To solve this problem, you must be able to use the compound growth function on a personal
calculator and employ trial and error to reach a solution. For example, you might start with
2. Labor productivity, measured in terms of output per worker, is by definition low in low–
income countries, as it depends on the quality of the labor and other inputs that combine
3. Domestic producers would rather not face competition from imports, so they would prefer a
trade policy that outlaws imports. Such an approach tends to increase the price and the profit
4. International trade means that people in developing countries have access to products that
might not otherwise be available. Imports also offer more competition for local goods,
5. Foreign aid does not always translate into the human and physical capital developing
countries need to become more productive. Some foreign aid merely extends the life of a
6. Foreign aid has been a mixed blessing for most developing countries. In some cases, that
aid has helped countries build the roads, bridges, schools, and other capital infrastructure