Real GDP per person in Westland is $30,000, while real GDP in Eastland is $10,000, Westland's real GDP per person is growing at 3 percent per year and Eastland's real GDP per person is growing at 3 percent per year. If these growth rates persist indefinitely, then:
A. Eastland's real GDP per person will rise until it equals Westland's real GDP per person.
B. Eastland's real GDP per person will eventually be greater than Westland's.
C. Westland's real GDP per person will always be at least $20,000 greater than Eastland's.
D. Eastland's real GDP per person will always be exactly $20,000 less than Westland's.
Answer: C
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A bank reports reserves of $500,000, physical capital of $200,000, loans of $1,000,000, deposits of $1,000,000, and owners' equity of $500,000. If the desired reserve ratio is 5 percent, the bank's desired reserves are
A) $25,000. B) $500,000. C) $1,000,000. D) $50,000. E) $10,000.
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What will be an ideal response?