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Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, ...

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Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, ...

Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, population (800,000), education of workforce, and value of natural resources owned.

Refer to the scenario above. Again, assume Sweetland has a higher GDP. If all inputs are the same, which of statements below could be responsible?

▸ Technology may be more advanced in Sweetland.

▸ The relationship between efficiency units of labor and GDP may differ in the two countries.

▸ The relationship between physical capital stock and GDP may differ in the two countries.

▸ All of the above.

Textbook

Macroeconomics

Edition: 3^rd

Authors: Acemoglu, Laibson, List

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