Suppose There Are Two Countries That Are Identical with the Following

question 4

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)output per capita will be greater in B than in A.
• B)output per capita will be greater in A than in B.
• C)economic growth will be higher in A than in B.
• D)more information is needed to answer this question.

---

Definitions:

Debt Financing

Raising capital through the sale of bonds, loans, or other notes to individuals or institutions.

Return on Assets

A financial ratio indicating how profitable a company is relative to its total assets.

Weighted Average Cost of Capital

An average representing the expected return on all of a company's securities, weighted according to the proportion each contributes to the total capital structure.

Systematic Risk

The risk inherent to the entire market or market segment, also known as market risk.