Suppose There Are Two Countries, Here and There, Which Have

question 190

Multiple Choice

Suppose there are two countries, Here and There, which have identical amounts of resources, identical technologies, and identical populations. Both produce two types of goods-consumer goods and capital goods-and they both always operate on their production possibilities frontiers. The only difference is that this year There chooses to produce relatively more capital goods than Here. What will happen as a result?

• A) Here will have a lower living standard this year and will grow slower than There.
• B) Here will have a lower living standard this year but will grow faster than There.
• C) There will have a lower living standard this year and will grow slower than Here.
• D) There will have a lower living standard this year but will grow faster than Here.

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Definitions:

Collectivism

The practice or principle of giving a group priority over each individual in it.

Interdependence

A reciprocal relation between interdependent entities (objects or individuals or groups) where they rely on each other to a significant extent.

Independence

The condition or quality of being free from dependence, control, or influence.

Oral Fixation

A concept in psychoanalytic theory suggesting an obsession with oral activities due to unresolved conflicts during the oral stage of psychosexual development.