According to the Convergence Theory

question 1

Multiple Choice

According to the convergence theory,

• A)less-developed countries should grow faster than advanced ones because of the ability to copy new technology
• B)the growth rates of all countries converge because in the long run, all resources are alike
• C)human capital differences can never be made up
• D)GDP and productivity growth rates should converge over time
• E)the impact of basic and applied research should converge over time

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Definitions:

Mutually Beneficial Trade

Trade that provides benefits to both parties involved, allowing them to attain a level of satisfaction or economic utility that would not be possible individually.

Specialization

Division of productive activities so that no one is self-sufficient.

Self-Sufficient

The ability of an individual, household, or nation to meet all their needs without external assistance or trade.

Standard of Living

A measure of the wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.