Suppose There Are Two Countries That Are Identical with the Following

question 23

Multiple Choice

Suppose there are two countries that are identical with the following exception.The saving rate in country A is greater than the saving rate in country B.Given this information,we know that in the long run

• A)the capital-labor ratio (K / N)will be greater in B than in A.
• B)the capital-labor ratio (K / N)will be greater in A than in B.
• C)the capital-labor ratio (K / N)will be the same in the two countries.
• D)economic growth will be higher in A than in B.

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Definitions:

Opportunity Cost

The value of the next best alternative forgone as the result of making a decision.

Production Alternative

Different ways in which a firm could allocate its resources to produce various goods or services.

Capital Goods

Physical assets used by a company to produce goods and services that are used to produce consumer goods or services.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.