Suppose Two Countries Are Identical in Every Way with the Following

question 15

Multiple Choice

Suppose two countries are identical in every way with the following exception.Economy A has a higher rate of depreciation (δ) 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:

Book Value

The net value of a company's assets minus its liabilities, often used to evaluate its financial health.

Salvage Value

The approximated value of an asset at the close of its functional life.

Useful Life

The estimated duration of time that an asset is expected to be operational and economically viable.

Units-Of-Activity

A depreciation method where the expense is based on the actual usage or activity of the asset rather than the passage of time.