Describe economic growth and loanable funds market
Economic Growth and Loanable Funds Market
Assignment Suppose you are employed as an assistant researcher to conduct study on the major determinants of the variations in the economic growth of countries. Based on the scenarios presented in the Assignment, compile a research paper that analyzes factors that indicate the disparities of economic growth among countries. View the Chapter 12: “Is Higher Productivity a Problem? Will it Lead to Widespread Job Losses?” video and Chapter 13: “Why are Stocks Riskier than Bonds?” video.
This Assignment will assess your knowledge based on the following outcomes:
AB204-3: Analyze factors that determine long run economic growth by conducting research using macroeconomic indicators data. GEL-6.5: Use Electronic Libraries/databases for research purposes. PC- 4.1: Assess the value of multiculturalism and diversity in a global environment.
PART 1: Comparing Long-Run Economic Growth Rates of Countries
Use the Kaplan Library and databases to conduct research to identify the key factors that determine longterm economic growth. You can find the most up-to-date reports on the economic growth trends of different countries under the World Bank website linked below.
After you have conducted research and read the items listed above, access the “Data & Research” tab in
the World Bank website and compare growth rates between two countries of your choice. Specifically,
select one advanced economy (such as U.S., Germany, etc.), and select one developing economy (such
as Angola, Bangladesh, etc.).
Download their data for five major economic indicators (2005–2014) such as the real GDP growth
(annual %), and three major social indicators such as population. Then identify and describe possible
factors that may explain the differences between the GDP growth rates and long-term economic growth
of the advanced and developing economies for the countries you selected.
Diversity has become the characteristics of the majority of the countries in the world. Globalization and
economic interdependence of countries calls for understanding and accommodating diversities.
Economic development theories and empirical studies also widely discuss and debate the impacts of
multiculturalism and diversity on economic growth and development. The positive roles of
multiculturalism and diversity in economic growth and development are praised in democratic countries
that have cultivated systems that accommodate and capitalize on diversities and multiculturalism (see
the article below).
Economic benefits of cultural diversity. (n.d.). SGS Economics & Planning. Retrieved from
On the other hand, developing countries in Asia, Africa, and Latin America, cultural and religious
diversities are the internal instability, polarization, conflicts, disintegration, etc., which have adverse
impact on economic growth and development. Since the developing countries don’t have systems that
effectively accommodate multiculturalism and diversity and dominant ethnic groups control power and
resources, they lead to lack of equal opportunities and significant socioeconomic gaps in countries (see
the links below for research examples on the issues for Latin America, Asia, and Africa).
Arocena, F., & Porzecanski, R. (n.d.). Ethnic inequality, multiculturalism and globalization: The cases of
Brazil, Bolivia and Peru. Retrieved from
Donnelly, R. (2015). Tensions and challenges in the management of diversity and inclusion in IT services
multinationals in India. Human Resource Management, 54(2), 199–215. Retrieved from
Kivoto, E. (n.d.). Ethnic conflict and its impact on economic development in Africa: A case study of
Kenya. Retrieved from
Discuss the value of recognizing and accommodating multiculturalism and diversity in a globalized
economic environment and their roles in promoting long-run economic growth. In line with the
developed and developing countries you selected for your research, discuss the benefits and challenges,
and recommend solutions in regard to multiculturalism and diversity in the two countries and their
impacts on the economy.
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PART 2: Loanable Funds Market
1. Examine each of the following scenarios in the market for loanable funds. Explain the impacts on
private savings, private investment spending, and the rate of interest under each of the following
events. Assume the economy is autarky (closed) and it does not have trade and capital transactions
(flows) with foreign countries.
a. Assume the government balances its budget and reduces the size of its deficit to zero. (Refer to the
graph below). What is its impact on private savings, private investment spending, and the rate of
b. Suppose the consumers decide to save more money, at the given rate of interest. Then assume the
budget is balanced and the deficit is zero (refer to the graph below). What is the impact of this scenario
on private savings, private investment spending and the rate of interest?
This Assignment is related to long-term economic growth and the roles of saving, investment and the
financial system in promoting economic growth (Chapters 12 and
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