Assume That Two Countries Both Have the Per-Worker Production Function

question 99

Multiple Choice

Assume that two countries both have the per-worker production function y = k^1/2,neither has population growth or technological progress,depreciation is 5 percent of capital in both countries,and country A saves 10 percent of output whereas country B saves 20 percent.If A starts out with a capital-labour ratio of 4 and B starts out with a capital-labour ratio of 2,in the long run:

• A) both A and B will have capital-labour ratios of 4.
• B) both A and B will have capital-labour ratios of 16.
• C) A's capital-labour ratio will be 4 whereas B's will be 16.
• D) A's capital-labour ratio will be 16 whereas B's will be 4.

---

Definitions:

Bank Balance

The amount of money held in a bank account at a given moment.

Book Balance

The balance of an account according to the accounting records, before any adjustments for reconciling items.

Check Register

A record of transactions in a checking account, including deposits, checks, and withdrawals.

Transactions

Financial events that affect an entity's financial statements, involving transfers or exchanges of value between parties.