Explain why GDP per capita varies among countries even though countries eventually converge to their balanced growth paths
What will be an ideal response?
Balanced growth paths differ among countries due to different saving rates, labor force growth rates, and the rates of labor-augmenting technological change. Because of this, countries experience conditional convergence, where each country converges to its own balanced growth path as opposed to the same balanced growth path for all countries. The differences in balanced growth paths among countries account for the differences in GDP per capita for these countries.
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Which of the following does not illustrate opportunity cost?
a. If I study, I must give up going to the football game. b. If I buy a computer, I must do without a 35" television. c. More consumer spending now means more spending in the future. d. If I spend more on clothes, I must spend less on food.
Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is
a. the value of the knowledge she would have received had she attended class. b. the $24 she could have earned if she had worked at her job for those two hours. c. the value of her nap minus the value of attending class. d. nothing, since she valued sleep more than attendance at class.