Suppose There Are Two Countries That Are Identical with the Following

question 23

Multiple Choice

Suppose there are two countries that are identical with the following exception: the saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run:

• A) output per capita will be the same in both countries.
• B) the capital- labour ratio (K/N) will be greater in A than in B.
• C) the capital- labour ratio (K/N) will be the same in the two countries.
• D) the capital- labour ratio (K/N) will be greater in B than in A.
• E) more information is needed to answer this question.

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Definitions:

Wages Payable

A liability account representing the amount owed to employees for work performed but not yet paid.

Gross Earnings

The total income earned by an individual or business before any deductions like taxes and social security contributions.

EIN

An Employer Identification Number, issued by the IRS, used for identifying a business entity and for tax filing purposes.

Form SS-4

The form filled out by an employer to get an EIN. The form is sent to the IRS, which assigns the number to the business.