The following table shows economic data for two countries.

-Refer to the table above.If the minimum wage increases from 10 rupee per hour to 15 rupee per hour in Country A and the retirement age in Country B decreases from 65 years to 60 years,all else equal,then ________.
A) GDP per capita in country B will increase
B) GDP per worker in country B will decrease
C) GDP per capita in country A will decrease
D) GDP per worker in county A will increase

Question

The following table shows economic data for two countries.
 
-Refer to the table above.If the minimum wage increases from 10 rupee per hour to 15 rupee per hour in Country A and the retirement age in Country B decreases from 65 years to 60 years,all else equal,then ________.
A) GDP per capita in country B will increase 
B) GDP per worker in country B will decrease 
C) GDP per capita in country A will decrease 
D) GDP per worker in county A will increase

Quizplus · Accepted Answer

Increasing the minimum wage in Country A will increase the cost of labor for firms, which may lead them to substitute capital for labor. This could increase labor productivity and therefore GDP per worker in Country A. Decreasing the retirement age in Country B could decrease labor force participation and therefore decrease GDP per worker in Country B. However, since the retirement age change is not directly related to GDP per capita, we cannot determine the impact on GDP per capita in either country.

The Following Table Shows Economic Data for Two Countries