Scenario: the Price of a Standard Basket of Goods in Country

question 3

Multiple Choice

Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries.
-Refer to the scenario above.If GDP remains constant but the population in Country B grows by 50 percent over the next 5 years,how will the standard of living change in Country B?

• A) People will be more likely to live below the absolute poverty line.
• B) GDP per capita will still be well above the absolute poverty line.
• C) On average, people will live above the poverty line, but some people may live below it.
• D) No definite conclusion can be made without knowing Country B's initial population.

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