(Solved) Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same ...

Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries.

Refer to the scenario above. Suppose Country A passes a law that requires all workers to complete repeated safety workshops. One year after the law was passed, workers are on average 5 percent less productive. Workers in Country B continue to produce at the same rate as the year before. During the same year, the population in Country A and in Country B increases by 2 percent. Consequently, 1 year after Country A passed the new law, ________.

▸ GDP per capita in Country A decreases, while GDP in Country A may or may not increase

▸ GDP in Country A increases, but GDP in Country B may or may not increase

▸ GDP per capita in Country A decreases, and GDP per capita in Country B increases

▸ workers in Country B on average are more productive than workers in Country A

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Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same ...

Macroeconomics

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