Consider Two Countries,Alpha and Beta

question 36

Multiple Choice

Consider two countries,Alpha and Beta.In Alpha,real GDP per capita is $6,000.In Beta,real GDP per capita is $9,000.Based on the economic growth model,what would you predict about the growth rates in real GDP per capita across these two countries?

• A)The growth rate of real GDP per capita will be lower in Alpha than it is in Beta.
• B)The growth rate of real GDP per capita will be higher in Alpha than it is in Beta.
• C)The growth rate of real GDP per capita in Alpha and Beta will be the same.
• D)The economic growth model makes no predictions regarding differences in growth rates of real GDP per capita across the two countries.

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Definitions:

Price-Earnings Ratio

is a measure of a company's current share price relative to its per-share earnings, used to evaluate if a stock is undervalued or overvalued.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt, calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.

Debt-To-Equity Ratio

A gauge for understanding the proportionate use of debt and equity by shareholders in the funding mechanisms for a company's assets.

Equity Multiplier

A metric indicating the proportion of a firm's assets funded by owner's equity.