Country A and country B are the same except country A has a

Country A and country B are the same except country A has a capital stock of 5,000 a population of 12,000 and employment of 10,000. Country B has a capital stock of 8,000 and a population of 24,000 and employment of 20,000. a. Country A has a higher standard of living and country B will not catch up. b. Country A has a higher standard of living but country B will catch up. c. Country B has a higher standard of living and country A will not catch up. d. Country B has a higher standard of living but country A will catch up.

Solution

standard of living of A= (capital stock*employment)/ population

=5000*10000/12000

=4167

standard of living of B =8000*20000/24000

=6667

SO  d. Country B has a higher standard of living but country A will catch up.