1145EconomicsMedium
If two countries start with the same real GDP/person and one country grows at 2 percent while the other grows at 4 percent?
Athe standard of living in the two countries will converge
Bthe standard of living in the country growing at 4 percent will start to accelerate away from the slower growing country due to compound growth
CNext year the country growing at 4 percent will have twice the GDP/person as the country growing at 2 percent
Done country will always have 2 percent more real GDP/person than the other
Correct answer
B. the standard of living in the country growing at 4 percent will start to accelerate away from the slower growing country due to compound growth
Explanation
The correct answer is the standard of living in the country growing at 4 percent will start to accelerate away from the slower growing country due to compound growth.