Suppose That Per Capita Income in Country A, a Developed $B$

question 93

Essay

Suppose that per capita income in country A, a developed country, is $30,000 per year, and per capita income in country B, a developing country, is $5,000 per year.
(A) Why does econamic theary predict that caunty $B$ will eventunally catch up with caunty A?
(B) Suppose cauntry B's incame per capita grows at 5 percent and caunty A's incame per capite growr at l percent. Using the rule of 72 , plot the growth path of income per capita relative ta tine far each cauntry. Based an this Paph da you think caunty $B$ wrill catch up with caunty A?
(C) Da you think cantry $B$ wril cantinue to frow at 5 percent?

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