This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Convergence means that A) if poor countries grow fast, then fast growing countries are poor. B) ... (Read 157 times)

Metfan725

  • Hero Member
  • *****
  • Posts: 552
on: Jun 30, 2018
Convergence means that
 
  A) if poor countries grow fast, then fast growing countries are poor.
  B) all countries grow at the same rate.
  C) all countries tend towards the same per capita income.
  D) the savings rate is positively related to per capita income.

Question 2

Why is it important, for an open economy, that investment not be consistently higher than saving?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

reelove4eva

  • Sr. Member
  • ****
  • Posts: 332
Reply #1 on: Jun 30, 2018
Answer to Question 1

C

Answer to Question 2

When investment is higher than saving, the difference is a net capital inflow. The extra investment that is financed by foreigners is an addition to their wealth, rather than an increase in the wealth of domestic citizens. The income from such investment must be paid to the foreign owners, thus is not available to contribute to domestic income and saving. The source of the capital inflow is a continual excess of imports over exports (negative trade balance). Imports are being financed through the sale of assets to foreigners. It is not so much investment but consumption that is unsustainably high; saving is unsustainably low.


Metfan725

  • Member
  • Posts: 552
Reply 2 on: Jun 30, 2018
Wow, this really help

upturnedfurball

  • Member
  • Posts: 334
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Before a vaccine is licensed in the USA, the Food and Drug Administration (FDA) reviews it for safety and effectiveness. The CDC then reviews all studies again, as well as the American Academy of Pediatrics and the American Academy of Family Physicians. Every lot of vaccine is tested before administration to the public, and the FDA regularly inspects vaccine manufacturers' facilities.

Did you know?

In most cases, kidneys can recover from almost complete loss of function, such as in acute kidney (renal) failure.

Did you know?

The newest statin drug, rosuvastatin, has been called a superstatin because it appears to reduce LDL cholesterol to a greater degree than the other approved statin drugs.

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

Though the United States has largely rejected the metric system, it is used for currency, as in 100 pennies = 1 dollar. Previously, the British currency system was used, with measurements such as 12 pence to the shilling, and 20 shillings to the pound.

Lycopodium obscurum growing on the forest floor. Lycopodium obscurum growing on the forest floor.
A mother dies, a father loses his leg—such calamities shattered poor urban families. Orphaned street A mother dies, a father loses his leg—such calamities shattered poor urban families. Orphaned street
Eating Breakfast Means More Energy and Fewer Calories throughout the Day Eating Breakfast Means More Energy and Fewer Calories throughout the Day
Desired Fertility versus Total Fertility Rate in Developing Countries Desired Fertility versus Total Fertility Rate in Developing Countries
Do you know how fast you should be going? Do you know how fast you should be going?
The population of a city has continued to grow since 1950. The population of a city has continued to grow since 1950.
Video: Helper T cell receptors, activation, proliferation, differentiation & action

For a complete list of videos, visit our video library