Question

Compare a hypothetical DVC with a hypothetical IAC. In the DVC, average per capita income is $5000 per year. In the IAC, average per capita income is $40,000 per year. If both countries have a savings rate of 10 percent per year, the amount of savings per capita in the DVC will be $ per person per year, while in the IAC it will be $ per person per year.

Answer 1

Answer:

The amount of savings per capita in the DVC will be $500 per year.

The amount of savings per capita in the IAC it will be $4,000 per year.

Explanation:

- The average savings per capita is calculated as:

* Average per capita income x saving rates.

- Thus, for DVC, amount of savings per capita is calculated as:

* Average per capita income of DVC x saving rates of DVC = $5,000 x 10% = $500.

- and for IAC, amount of savings per capita is calculated as:

* Average per capita income of IAC x saving rates of IAC = $40,000 x 10% = $4,000.