Question

B. Theorems--True or False?

For each proposition, considered independently: (a) State whether True or False. (b) Then explain your answer. Define the important terms in your explanation. You may use graphs in your answers.

B1. A country's potential output can increase while its actual output decreases.

B2. China will likely surpass the United States in per-capita GDP before it surpasses the United States in GDP itself.

Answer 1

Answer: B1

A country's potential output can increase while its actual output decreases:-

The statement is True as it is described to be the Negative Output Gap

Explaination of Negative output gap :-

This occurs when actual output is less than potential output gap. This is also called a deflationary (or recessionary) gap. In this situation, the economy is producing less than potential. There Exists unemployment, low growth , Low GDP and a fall in output.

China will likely surpass the United States in per-capita GDP before it surpasses the United States in GDP itself.

The statement is the False To surpass the united states in per capita GDP China has to first surpass the united states in GDP itself Because Without surpassing the GDP china can not ensure growth and hence low production growth less national income less per capita income compared to U.S and if china has to surpass the per capita of u.s it must has first to exceed its GDP than the U.S otherwise it can not hence the statement is the false one .

As per world bank report China could overtake the US as the world's largest economy by 2024. These are the largest economies from 1992 - 2024

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