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

question 24

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.Suppose Country A passes a law that requires all workers to complete repeated safety workshops.One year after the law was passed,workers are on average 5 percent less productive.Workers in Country B continue to produce at the same rate as the year before.During the same year,the population in Country A and in Country B increases by 2 percent.Consequently,1 year after Country A passed the new law,________.

• A) workers in Country B on average are more productive than workers in Country A
• B) GDP in Country A increases, but GDP in Country B may or may not increase
• C) GDP per capita in Country A decreases, and GDP per capita in Country B increases
• D) GDP per capita in Country A decreases, while GDP in Country A may or may not increase

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Definitions:

Outgroup

In cladistics, a taxon that represents an approximation of the ancestral condition; the outgroup is related to the ingroup (the members of the group under study) but separated from the ingroup lineage before they diversified.

Diverges

Moves or extends in different directions from a common point, or becomes fundamentally different in character or form.

Consortium

An association, typically of several business companies, created to undertake a project that is beyond the resources of any one member.

Barcode

A representation of data regarding the object to which it is attached that is readable by machines, typically used for identification and tracking purposes.