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

question 118

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.Assume Country A initially has a population of 10,000 people.If its population grows by 50 percent but its GDP remains constant,how will the standard of living change in Country B?

• A) GDP per capita remains constant.
• B) GDP per capita decreases by 33 percent.
• C) GDP per capita decreases by 50 percent.
• D) GDP per capita increases by 33 percent.

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Definitions:

Unambiguous

Clear and precise with only one interpretation, leaving no doubt or confusion.

Ambiguous

Something that can be understood in more than one way; lacking clearness or definiteness.

Productivity

In industry, the capability to produce effectively, gauged by how much output is generated per input unit.

Reinforcement

In psychology, a process by which a behavior is strengthened or increased in frequency, often through the application of a reward or the removal of a negative stimulus.