You Are Asked to Make Comparisons of Two Pairs of Countries

question 114

Essay

You are asked to make comparisons of two pairs of countries. The first pair are the Latin American countries of Chile and Argentina; the second pair are France and Germany. You are given the following information: the average saving rate in Argentina is 23.3 percent, in Chile it is 28.7 percent, in France it is 21.1 percent, and in Germany, 20.8 percent. Assuming the countries are identical in every other way, which country would the Solow model predict to have the higher per capita real GDP? However, you find out the steady state real per capita GDP in each of the countries is $13,300 in Argentina, $12,500 in Chile, $31,300 in France, and $34,000 in Germany. What is the primary factor that the simple Solow model uses to describe these differences? Give an example.

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Definitions:

PTH

Parathyroid hormone, responsible for regulating blood calcium levels.

Blood Calcium

The concentration of calcium ions in the blood, vital for healthy bones, teeth, and proper function of the heart, muscles, and nerves.

Nuclear Receptor

A class of proteins within cells that, upon binding with a ligand, can act as transcription factors to affect gene expression.

Lipid-soluble

A characteristic of compounds that can dissolve in fats and oils but not in water, influencing their absorption and transport in the body.