Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries.
-Refer to the scenario above.If GDP remains constant but the population in Country B grows by 50 percent over the next 5 years,how will the standard of living change in Country B?
A) People will be more likely to live below the absolute poverty line.
B) GDP per capita will still be well above the absolute poverty line.
C) On average, people will live above the poverty line, but some people may live below it.
D) No definite conclusion can be made without knowing Country B's initial population.

Question

Quizplus · Accepted Answer

Even if the population of Country B increases by 50%, its GDP will also increase proportionally since the scenario states that GDP remains constant. Thus, GDP per capita will still be well above the absolute poverty line, indicating that the standard of living in Country B will not significantly change.

Scenario: the Price of a Standard Basket of Goods in Country