If Two Countries Have the Same Aggregate Production Function, Rate

question 26

Multiple Choice

If two countries have the same aggregate production function, rate of technological growth, and savings rate, then

• A)they will always have the same per-capita income
• B)the country with the higher rate of population growth will have a higher per-capita income
• C)the country with the lower rate of population growth will have a higher per-capita income
• D)the country with the highest depreciation rate will have the highest per-capita income
• E)both C and D

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Definitions:

Statutory Depletion

A tax deduction method that allows an owner of natural resources to account for the reduction of reserves as a product is produced and sold.

Cost Depletion

An accounting method used to allocate the cost of extracting natural resources, such as minerals or timber, over the period of extraction.

Permanent Difference

Differences between accounting income and taxable income that will not reverse in future periods.

Book Income

The income reported by a company according to accounting principles, often different from taxable income due to timing and valuation differences.