If the Economies of East and West Timor Are Identical

question 112

Multiple Choice

If the economies of East and West Timor are identical in every way except that East Timor has fewer researchers:

• A) West and East Timor will grow at the same rate.
• B) East Timor should grow faster, according to the Romer model.
• C) West Timor should grow faster, according to the Solow model.
• D) West Timor should grow faster, according to the Romer model.
• E) East Timor is smaller than West Timor.

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Definitions:

Capital Goods

Long-lasting goods acquired and used by businesses to produce other goods and services, contributing to their operational capabilities.

Gross Investment

The total amount spent on purchasing or constructing new capital assets before accounting for depreciation.

Net Investment

The portion of total investments in physical assets (like buildings, machinery, and inventory) that remain after accounting for depreciation.

Depreciation

The process of allocating the cost of a tangible or intangible asset over its useful life, reflecting the decrease in value of the asset over time due to use, wear and tear, or obsolescence.