In General, If Country a Is Accumulating Capital at a Faster

question 105

Multiple Choice

In general, if country A is accumulating capital at a faster rate than country B, then country A

• A)will soon have a comparative advantage in the production of most goods.
• B)is using a larger proportion of resources to produce consumption goods.
• C)will have a production possibilities frontier that is shifting out faster than country B's.
• D)will have a higher rate of inflation than country B.
• E)will have more unemployment than country B.

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Definitions:

Declining-Balance Depreciation

A method of accelerated depreciation where an asset loses value by a constant percentage each year over its useful life.

Remodeling Costs

Expenses associated with making improvements or alterations to a building or structure to enhance its value or functionality.

Closing Costs

Expenses, over and above the property cost, that buyers and sellers normally incur to complete a real estate transaction.

Historical Cost Principle

An accounting principle that assets should be recorded and reported at their original purchase cost.