Country a and Country B Are the Same Except Country

question 226

Multiple Choice

Country A and country B are the same except country A has a capital stock of 5,000 a population of 12,000 and employment of 10,000. Country B has a capital stock of 8,000 and a population of 24,000 and employment of 20,000.

• A)Country A has a higher standard of living and country B will not catch up.
• B)Country A has a higher standard of living but country B will catch up.
• C)Country B has a higher standard of living and country A will not catch up.
• D)Country B has a higher standard of living but country A will catch up.

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Definitions:

Face Value

The nominal or original value stated on a coin, banknote, security, or any other financial instrument, without accounting for inflation, interest, or any other market factors.

Interest Rate

The percentage at which interest is paid by borrowers for the use of money they borrow from a lender.

Reserve Requirement

The portion of depositors' balances that banks must have on hand as cash, a regulation set by central banks to ensure liquidity.

Deposit Multiplier

The ratio that describes the potential increase in bank deposits that can result from an increase in banks' reserves through the fractional reserve banking system.