If Per Capita GDP in a Richer Country Grows at a Faster

question 37

Multiple Choice

If per capita GDP in a richer country grows at a faster annual rate than in a poorer country,

• A)the gap between their standards of living will widen over time.
• B)the gap between their standards of living will close over time.
• C)the gap between their standards of living will close over time as long as the rate of population growth is higher in the poorer country.
• D)whether the gap in living standards widens or closes over time depends on the absolute size of the relative growth rates.
• E)the difference in their living standards will not change over time.

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Definitions:

Risk-free Asset

An investment with zero default risk, often assumed to be government bonds, providing a guaranteed return.

Average Returns

The mean financial return of an investment over a specified period.

Tax Cut

A reduction in the rate of taxes imposed by the government.

Government Contract

A legal agreement between a government entity and a private company for goods or services, often involving specific regulatory requirements.