Question

Between 1960 and 2010 the annual growth rate was 3% in country A and 1% in country B. The two countries are in the process of convergence if:

(a) in 1960 country A was poorer than country B

(b) in 1960 country A was richer than country B

(c) since 1960 the capital output ration has increased more in country A than in country B

(d) the savings rate is higher in country A than country B

(e) both (a) and (c)

Answer 1

(a) in 1960 country A was poorer than country B.