Country X Devoted 70 Percent of Its Resources to Consumption

question 88

Multiple Choice

Country X devoted 70 percent of its resources to consumption, while Country Y devoted 80 percent to consumption. Other things being equal, you can predict that

• A) Country Xʹs economy will grow faster than Country Yʹs.
• B) Country Yʹs economy will grow faster than Country Xʹs.
• C) Country Xʹs opportunity cost of economic growth is lower than Country Yʹs.
• D) Country Yʹs rate of capital accumulation is higher than Country Xʹs

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Definitions:

Entrepreneurs

Individuals who take the initiative to start and manage a business, taking on financial risks with the aim of making a profit.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to no single buyer or seller having control over prices.

Economic Profits

Economic profits refer to the excess income earned by firms after accounting for both explicit and implicit costs, serving as a measure of efficiency and profitability.

Creative Destruction

A process where new innovations lead to the demise of older technologies or businesses, driving economic growth and progress.