If Real GDP in the United States Is Growing at an Annual

question 195

Multiple Choice

If real GDP in the United States is growing at an annual rate of 3.2% per capita and Bolivia's real GDP per capita is growing at a rate of 1.3%,which of the following would we expect in the long run? Assume real GDP per capita in the United States begins at a level above that of real GDP per capita in Bolivia.

• A)Real GDP per capita in the United States will always be 1.9% higher than real GDP per capita in Bolivia.
• B)The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will shrink over time.
• C)The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will increase over time.
• D)The difference between the level of real GDP per capita in the United States and real GDP per capita in Bolivia will always be $1.9 trillion.

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Definitions:

Direct Labor

The cost of wages for employees who are directly involved in the production of goods or the provision of services.

Cash Collections

The process of receiving and processing payments from customers or debtors.

Cash Disbursements

Financial outflows or payments made by a business, often recorded in a ledger for accounting purposes.

Production Costs

The total expense related to the manufacturing or production of goods, including raw materials, labor, and overhead.