Two countries are the same,except one is poorer.Assuming the traditional assumption about the production function is made there are
A)diminishing returns to capital so the poor country grows slower.
B)increasing returns to capital so the poor country grows slower.
C)diminishing returns to capital so the poor country grows faster.
D)increasing returns to capital so the poor country grows faster.

Question

Quizplus · Accepted Answer

According to the traditional assumption of diminishing returns to capital, poorer countries tend to grow faster because they can achieve higher returns on investment compared to richer countries, which have already accumulated more capital.

Two Countries Are the Same,except One Is Poorer