Suppose That There Are Diminishing Returns to Capital

question 16

Multiple Choice

Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has less capital and so less real GDP per person.Suppose that both increase their saving rate from 3 percent to 4 percent.In the long run

• A)both countries will have permanently higher growth rates of real GDP per person,and the growth rate will be higher in the country with more capital.
• B)both countries will have permanently higher growth rates of real GDP per person,and the growth rate will be higher in the country with less capital.
• C)both countries will have higher levels of real GDP per person,and the temporary increase in growth in the level of real GDP per person will have been greater in the country with more capital.
• D)both countries will have higher levels of real GDP per person,and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.

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Definitions:

Temporary Workers

Individuals employed in a work assignment that has a specified end date, often used by companies to fill short-term needs or seasonal positions.

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Individuals hired to perform specific tasks or projects for a certain period under a contract, rather than being permanent employees of a company.

Human Resource Executive

A high-level professional within an organization responsible for overseeing and managing the human resources department and ensuring effective implementation of personnel policies and procedures.

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Professionals who seek out, interview, and screen applicants to fill job openings in organizations.