If two nations begin with identical real GDP per capita, and one experiences a 2% growth rate while the other grows at 4%, what will happen over time?

Risks And Diversification & Efficient Market Hypothesis MCQs for PPSC, FPSC, NTS, and Pakistan government job tests. Select an option below, then read the explanation.

Risks And Diversification & Efficient Market Hypothesis

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Subject
Risks And Diversification & Efficient Market Hypothesiseconomics-mcqs › risks-and-diversification-efficient-market-hypothesis
Published
30 May 2019
Last updated
28 May 2026

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Explanation

Because growth compounds over time, the country with the higher 4% growth rate will see its real GDP per capita increase at an accelerating pace compared to the country growing at 2%. This leads to a widening gap in living standards rather than a fixed difference or convergence.

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