If a Rich Country Grows at a Faster Rate Than

question 86

Multiple Choice

If a rich country grows at a faster rate than a poor one, then

• A) the gap in their standard of living will widen over time.
• B) the gap in their standard of living will close over time.
• C) the difference in their living standards will not change over time.
• D) whether or not the living standards gap widens or closes over time depends on the absolute size of the relative growth rates.

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Definitions:

Assumptions

Premises or conditions accepted as true or certain without proof for the purpose of further analysis or argument.

Basic Assumptions

Fundamental beliefs or principles that underlie the financial accounting system, including economic entity, monetary unit, time period, and going concern.

Internal Growth Rates

The maximum rate at which a company can expand using only internal financial resources without resorting to borrowing or seeking new equity investment.

External Financing Needs (EFN)

The amount of funding a business requires from external sources to finance its planned growth or expansion activities.