If two nations begin with identical real GDP per capita, and one experiences a 2% growth rate while the other grows at 4%, what will happen over time?

Question

Accepted Answer

The country with the 4% growth rate will see its living standards increasingly outpace the slower-growing nation due to the effects of compound growth.

Answer

One nation will consistently have a 2% higher real GDP per capita than the other.

Answer

The living standards of both countries will gradually become equal.

Answer

After one year, the nation growing at 4% will have double the GDP per capita of the one growing at 2%.

Answer

Both countries will maintain the same growth trajectory indefinitely.

If two nations begin with identical real GDP per capita, and one experiences a 2% growth rate while the other grows at 4%, what will happen over time?

Explanation

More Risks And Diversification &amp; Efficient Market Hypothesis MCQs

More Risks And Diversification & Efficient Market Hypothesis MCQs