Suppose there are two countries that are identical in every way with the following exception: Country A has a lower depreciation rate (6) than country B. Given this information, we know with certainty that:
A) K/N will be the same in the two countries.
B) the growth rate will be higher in B than in A.
C) K/N will be higher in A.
D) K/N will be higher in B.
E) the growth rate will be higher in A than in B.

Question

Quizplus · Accepted Answer

A lower depreciation rate means that capital (K) will be more durable in Country A, leading to a higher capital-to-labor ratio (K/N). However, this does not necessarily mean that the growth rate will be higher in B than in A, as there are other factors that could influence economic growth.

Suppose There Are Two Countries That Are Identical in Every