Suppose That There Are Diminishing Returns to Capital

question 16

Multiple Choice

Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has less capital and so less real GDP per person.Suppose that both increase their saving rate from 3 percent to 4 percent.In the long run

• A)both countries will have permanently higher growth rates of real GDP per person,and the growth rate will be higher in the country with more capital.
• B)both countries will have permanently higher growth rates of real GDP per person,and the growth rate will be higher in the country with less capital.
• C)both countries will have higher levels of real GDP per person,and the temporary increase in growth in the level of real GDP per person will have been greater in the country with more capital.
• D)both countries will have higher levels of real GDP per person,and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.

---

Definitions:

Revolutionary Heritage

The cultural, political, and historical legacy left by a revolution, particularly the American Revolution.

Preamble

An introductory statement in a document that explains the document's purpose and underlying philosophy.

Black Abolitionists

African American activists who campaigned against the enslavement and oppression of black people.

American Anti-Slavery Society

Founded in 1833, the organization that sought an immediate end to slavery and the establishment of equality for black Americans. It split in 1840 after disputes about the role of women within the organization and other issues.