Suppose Two Countries Are Identical in Every Way with the Following

question 51

Multiple Choice

Suppose two countries are identical in every way with the following exception.Economy A has a higher saving rate than economy B.Given this information,we know with certainty that

• A)steady state consumption in A is higher than in B.
• B)steady state consumption in A is lower than in B.
• C)steady state consumption in A and in B are equal.
• D)steady state growth of output per worker is higher in A than in B.
• E) none of the above

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Definitions:

Industrially Advanced Nations

Countries that have highly developed industries, infrastructure, and higher levels of income for their citizens.

Aggregate Outputs

The total amount of goods and services produced in an economy over a specific time period.

Agricultural Subsidies

Financial assistance from government to farmers to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities.

Export Income

Revenue generated by a country or company from selling goods and services to other countries.