If the Production Functions of Rich and Poor Nations Are

question 16

Multiple Choice

If the production functions of rich and poor nations are NOT identical, resulting in lower marginal products of capital for poor nations, then:

• A) capital markets are basically dysfunctional.
• B) it must mean the labor productivity for poor nations is higher.
• C) capital markets cannot be relied on to bring about convergence.
• D) capital markets may be functioning efficiently and correctly after all.

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