Answer Questions on the Basis of the Following Diagram

question 24

Multiple Choice

Answer questions on the basis of the following diagram. Assume all migration is costless.




-Assume there are initially 1000 workers in country X and 500 workers in country Y.As workers begin to migrate,the total value of output will:

• A)increase in country X and decrease in country Y; the combined total will increase
• B)increase in country X and decrease in country Y; the combined total will decrease
• C)increase in country X and decrease in country Y; the combined total will not change
• D)not change in either country

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Definitions:

Deductible Contribution

An eligible contribution to a qualified plan or account that reduces taxable income.

Coverdell Education Savings Account

A savings account that allows money to grow tax-free when the funds are used for education expenses.

AGI

Adjusted Gross Income, which is gross income minus adjustments, serving as the basis for calculating taxable income.

Annuity Contract

A financial product sold by an insurance company that provides guaranteed income over a period of time for a flat or periodic payment.