Macroeconomics 5th Edition by Olivier Blanchard

Exercise 7

The New Economy and growth The average annual growth rate of output per worker in the United States rose from 1.8% during the period 1970 to 1995 to 2.8% for the years 1996 to 2006. This has led to talk of a New Economy and of sustained higher growth in the future than in the past.
a. Suppose output per worker grows at 1.8% per year. What will output per worker be-relative to today's level-in 10 years 20 years 50 years
b. Suppose output per worker grows instead at 2.8% per year. What will output per worker be-relative to today's level-in 10 years 20 years 50 years
c. If the United States has really entered a New Economy, and the average annual growth rate of output per worker has increased from 1.8% per year to 2.8%, how much higher will the U.S. standard of living be in 10 years, 20 years, and 50 years relative to what it would have been had the United States remained in the Old Economy
d. Can we be sure the United States has really entered a New Economy, with a permanently higher growth rate Why or why not