Suppose there are two countries that are identical with the following exception: the saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run:
A) output per capita will be the same in both countries.
B) the capital- labour ratio (K/N) will be greater in A than in B.
C) the capital- labour ratio (K/N) will be the same in the two countries.
D) the capital- labour ratio (K/N) will be greater in B than in A.
E) more information is needed to answer this question.

Question

Quizplus · Accepted Answer

A higher saving rate in country A means that it will have more investment and accumulation of capital over time than in country B. As a result, the capital-labor ratio (K/N) will be higher in country A than in country B, leading to higher output per capita in country A in the long run.

Suppose There Are Two Countries That Are Identical with the Following