EBK INTERNATIONAL ECONOMICS
7th Edition
ISBN: 9780134523873
Author: Gerber
Publisher: YUZU
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Question
Chapter 4, Problem 1SQ
To determine
Explain the relative labor or capital abundancy of two countries.
Expert Solution & Answer
Explanation of Solution
The capital labor ratio of the US can be calculated as follows:
The capital labor ratio of Canada can be calculated as follows:
The larger capital labor ratio means that the country is rich in capital, and it is more capital abundant. Here, the capital labor ration of the US is greater than that of Canada. Thus, the capital-abundant country is the US and labor-abundant country is Canada because of the higher labor capital ratio.
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Students have asked these similar questions
Some resource-rich countries have succeeded in converting resource wealth into longterm and equitable economic development, while many others have not. Natural resources have played a fundamental role in the growth of several industrialized economies, including Germany and the United Kingdom, where coal and iron ore deposits were a precondition for the Industrial Revolution. The United States was the world’s leading mineral economy from the mid-nineteenth to the mid-twentieth century and in the same period became the world’s leader in manufacturing (van der Ploeg 2011). More recently, countries such as Botswana, Chile, and Norway have used abundant oil and mineral resources as the foundation for economic growth.
Discuss in depth, based on your understanding of the various sources of fiscal risks what complicates fiscal management in resource rich countries. Taking Zambia as a case study, suggest ways in which these risks can be managed.
Suppose country A has 5000 units of capital and 2000 units of labor while country B has 1000 units of capital and 3000 units of labor:
Which country is capital abundant and which one is labor abundant?
Graphically explain the economy’s production possibility curve in terms of economic
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Chapter 4 Solutions
EBK INTERNATIONAL ECONOMICS
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Similar questions
- According to Charles Wheelan's Naked Economics, which of the below is NOT TRUE for human capital? Group of answer choices Human capital increases productivity. Human capital makes for healthier people. Human capital increases earning potential of workers. Human capital increases the cost of labor and makes a nation less competitive globally. Human capital makes for better parents.arrow_forwardUse a production-possibility curve to show how resource growth and improvement in technology can allow a nation to increase its production of government goods and services while also increasing its output of private goods and services.arrow_forwardSuppose country A has 5000 units of capital and 2000 units of labor while country B has 6000 units of capital and 3000 units of labor. which country capital abundant.arrow_forward
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