Once a Country Is Wealthy

question 33

Multiple Choice

Once a country is wealthy,

• A)it no longer needs any human capital.
• B)capital becomes more productive due to the "catch-up effect."
• C)None of these answers.
• D)it may be harder for it to grow quickly because of the diminishing returns to capital.
• E)it is nearly impossible for it to become relatively poorer.

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Definitions:

Exchange Rate

The conversion value of one currency into another.

Norwegian Krone

The official currency of Norway, denoted as NOK and used across the country.

Inflation Rate

The pace at which prices for various goods and services climb, causing the value of money to decline.

Uncovered Interest Parity

A financial theory that suggests interest rate differentials between two countries will be equal to the expected change in exchange rates between their currencies.