Suppose That There Are Diminishing Returns to Capital

question 25

Multiple Choice

Suppose that there are diminishing returns to capital.Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other.Finally,suppose that the saving rate in both countries increases from 4 percent to 7 percent.Over the next ten years we would expect that

• A)the growth rate will not change in either country.
• B)the country that started with less capital per worker will grow faster.
• C)the country that started with more capital per worker will grow faster.
• D)both countries will grow and at the same higher rate.

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Definitions:

Circadian Rhythm

The natural internal process that regulates the sleep-wake cycle and repeats roughly every 24 hours.

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The central temperature of the body, maintained within a narrow range necessary for optimal physiological functioning.

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Any bodily movement produced by skeletal muscles that requires energy expenditure, beneficial for health and fitness.

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Infections that patients acquire while receiving treatment for other conditions within a healthcare setting.