What is convergence hypothesis? Why should we expect convergence in the long run?
The convergence hypothesis holds that nations with low levels of productivity tend to have high productivity growth rates, so that international productivity differences shrink over time. In some poor countries, the supply of capital may be growing very rapidly. In others, educational attainment may be rising quickly, albeit from a low base. But the main reason to expect convergence in the long run is that low-productivity countries should be able to learn from high-productivity countries as scientific and managerial know-how spreads around the world.
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Which of the following are TRUE regarding Milton Friedman's k-percent money targeting rule?
i. Currently this policy is used by many policy makers. ii. This rule sets the growth rate of the quantity of money independently of the economy's behavior. iii. For this policy to work well, the velocity of circulation must be stable. A) ii and iii B) i and ii C) i only D) ii only E) iii only
What's the difference between firm-specific risk and market risk? Will diversification eliminate one or both? Explain