initially Country A has a greater GDP per capita than Country B, but the growth rate in Country A is only 1 percent, while it is 2 percent in Country B. If these growth rates continue forever, which of the following is correct?
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Step 1
In Country A: GDP per capita after one year = GDP per capita * (1 + growth rate) GDP per capita after one year = GDP per capita * (1 + 0.01) = GDP per capita * 1.01 In Country B: GDP per capita after one year = GDP per capita * (1 + growth rate) GDP per capita Show more…
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