Consider two countries, Alpha and Beta.In Alpha, real GDP per capita is $6,000.In Beta, real GDP per capita is $9,000.Based on the economic growth model, what would you predict about the growth rates in real GDP per capita across these two countries?
A)The growth rate of real GDP per capita will be lower in Alpha than it is in Beta.
B)The growth rate of real GDP per capita will be higher in Alpha than it is in Beta.
C)The growth rate of real GDP per capita in Alpha and Beta will be the same.
D)The economic growth model makes no predictions regarding differences in growth rates of real GDP per capita across the two countries.
E)The growth rate of real GDP per capita will be higher in Beta than it is in Alpha and the gap will widen over time.

Question

Quizplus · Accepted Answer

According to the economic growth model, countries with lower initial levels of real GDP per capita will experience faster growth rates than countries with higher initial levels. Therefore, we would predict that Alpha, with a lower initial level of real GDP per capita, will experience a higher growth rate than Beta.

Consider Two Countries, Alpha and Beta