Country A and country B have the same Cobb-Douglas production function except country A has a capital stock of 5,000, a population of 12,000 and employment of 10,000. Country B has a capital stock of 8,000, a population of 24,000 and employment of 20,000. Technology, national saving rate, depreciation rate and population growth rate are the same in the two countries Today country B has a higher standard of living but country A will catch up. Today country B has a higher standard of living and country A will not catch up. Today country A has a higher standard of living but country B will catch up. Today country A has a higher standard of living and country B will not catch up.

Country A and country B have the same Cobb-Douglas production function except country A has a capital stock of 5,000, a population of 12,000 and employment of 10,000. Country B has a capital stock of 8,000, a population of 24,000 and employment of 20,000. Technology, national saving rate, depreciation rate and population growth rate are the same in the two countries Today country B has a higher standard of living but country A will catch up. Today country B has a higher standard of living and country A will not catch up. Today country A has a higher standard of living but country B will catch up. Today country A has a higher standard of living and country B will not catch up.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 4P

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