Answer to Question #239357 in Macroeconomics for kylexxuu1

Question

Country A is twice as rich as Country B now, In a situation where both the countries have same exact fundamentals (excluding mps) how will their growth rates compare in the long run? Explain your answer.

Answer 1

Economic growth in the long run can be defined as the sustained rise in quantity of goods and services that an economy produces. Economic growth is closely related to some determinants like growth of productivity, demographic changes and labor force participation. Therefore in the long run the growth between country A and B will depend on the determinants of growth that do impact on the economy.