“If two countries are growing at the same rate, the income gap between the two countries should remain the same.” Evaluate this statement.
What will be an ideal response?
This statement is incorrect. In the case of a low income country (earning say, $300 per capital per year) and a high income country (earning $30,000 per capital per year), a growth rate of 5% in each country produces a very different income growth. At the start, the income gap is $29,700. Growing at 5%, the low income country earns $15 and the high income country earns $1500. Average yearly per capital incomes now total $315 for the low income and $31,500 for the high income country, increasing the absolute income gap to $31,185. Thus the fact that two countries are growing at the same rate can be deceiving in terms of the true income gap between the two countries.
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The office of the Federal Reserve Bank of New York charged with implementing Federal Reserve open market policy actions is known as the
A) Open Market Coordination Office. B) Open Market Cooperation Office. C) Response Desk. D) Trading Desk.
If price equals average total cost at the profit-maximizing output level, then in the short run,
a. profit is positive b. profit is negative c. the firm will go out of business d. the firm will earn zero profit e. the firm's supply curve is horizontal
The goals of charitable organizations are inevitably inconsistent with the principles associated with profit maximization
Indicate whether the statement is true or false
If the price level falls but people don't feel richer because of that fall, then the AD curve would likely:
A. shift in. B. be flatter than it otherwise would be. C. be steeper than it otherwise would be. D. shift out.