Conditional Convergence Predicts That If Two Countries Have the Same

question 131

Multiple Choice

Conditional convergence predicts that if two countries have the same steady-state level of output,the poorer country will:

• A) grow but never be able to catch up with the richer country.
• B) catch up with the richer country because the richer country will not be able to maintain its steady-state output level.
• C) catch up with the richer country because it will grow faster than the rich country.
• D) not grow at all and will fall further behind the rich country.

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Definitions:

Market Price

The prevailing market rate at which transactions for assets or services are conducted.

Investment Sold

The act of divesting an asset or security, converting an investment back into cash or its cash equivalent.

Equity Investment Transactions

Financial activities involving the buying and selling of stock or ownership stakes in a company.

Fair Value Method

An accounting approach used to measure and report the actual or estimated market value of an asset or liability at the present time.