Which of the following statements is true?
I. Small differences in rates of economic growth can lead to large differences in levels of potential output over time.
II. From the perspective of the rule of 72, small differences in rates of economic growth between two countries will not significantly affect their respective standards of living.
III. Countries that have higher population growth rates are likely to see higher economic growth rates because increases in population lead to increases in the size of the labor force.

Question

Quizplus · Accepted Answer

Statement I is true because small differences in economic growth rates over time can compound and lead to significant differences in potential output levels. Statement II is false because the rule of 72 indicates that small differences in growth rates can lead to significant differences in the time it takes for a variable (such as GDP) to double. Statement III is false because population growth alone does not necessarily lead to economic growth; it depends on factors such as productivity, technology, and investment.

Which of the Following Statements Is True