Post-War German Economic Divergence

Data Sources for German Economic Comparison Graph (Figure 1.16)

Causes of East Germany's 1950 Economic Disadvantage

Interpreting Post-War Economic Divergence

From 1950 to 1990, four countries exhibited distinct economic growth patterns. Country W, a capitalist nation, began with a high GDP per capita and grew steadily. Country E, a centrally planned economy, started with a lower GDP per capita than Country W, and the gap between them widened significantly over the 40-year period. Two other capitalist nations, Country J and Country S, started with much lower GDP per capita than Country W, but both grew at a faster rate, with Country J eventually matching Country W's level of output by 1990. Which conclusion is best supported by these observations?

Evaluating Economic Growth Models

The economic performance of West Germany, Japan, and Spain between 1950 and 1990 demonstrates that adopting a capitalist economic system guarantees a country will achieve the same level of per capita output as other leading capitalist nations within that period.

Based on the economic performance from 1950 to 1990, match each country with the description of its GDP per capita growth trajectory.

Analyzing Divergent Economic Growth Paths

An economist analyzes the economic performance of four nations from 1950 to 1990.

• Nation W, a market-based economy, started with the highest per-capita output and experienced consistent growth.
• Nation E, a centrally-planned economy, started with a lower output than Nation W, and the gap between them widened over time.
• Nations J and S, both market-based economies, started with significantly lower per-capita outputs than Nation W. However, they both grew at a faster pace than Nation W, with Nation J's output eventually matching Nation W's by 1990.

What is the most accurate inference that can be drawn by comparing the trajectories of only the market-based economies (Nations W, J, and S)?

Consider the economic performance of four countries from 1950 to 1990. Country W (capitalist) began with a high per capita output and grew steadily. Country E (centrally planned) started with a lower output than Country W, and this gap widened over the period. Countries J and S (both capitalist) started with much lower outputs than Country W. Country J experienced rapid growth and its output level eventually matched Country W's, while Country S also grew but did not catch up. Which of the following statements provides the most accurate analysis of these divergent paths?

An economic dataset tracks the per capita output of four countries from 1950 to 1989. West Germany began with a high output and grew steadily. East Germany started with a lower output than West Germany, and the gap between them widened over time. Japan and Spain both started with much lower outputs than West Germany but grew more rapidly. Based on this information, arrange the countries in descending order, from the one with the highest average rate of growth to the one with the lowest during this period.

An economic advisor in 1989 is analyzing the post-1950 economic trajectories of four distinct nations to inform policy for a developing country.

• Nation A (Market Economy): Started with a high level of output per person and experienced steady, continuous growth.
• Nation B (Centrally Planned Economy): Started with a lower output per person than Nation A, and this gap widened considerably over the four decades.
• Nation C (Market Economy): Started with a very low output per person but experienced exceptionally rapid growth, eventually matching Nation A's output level.
• Nation D (Market Economy): Started with a low output per person and, while growing faster than Nation A, did not fully close the output gap by 1989.

Based on this evidence, which of the following policy recommendations is the most defensible?