1. Assume a DVC and an IAC presently have real per capita outputs of $500 and $5,000 respectively. If both nations have a 3 percent increase in their real per capita outputs, by how much will the per capita output gap change?

2. Contrast the demographic transition view of population growth with the traditional view that slower population growth is a prerequisite for rising living standards in the DVCs.

3. Because real capital is supposed to earn a higher return where it is scarce, how do you explain the fact that most international investment flows to the IACs (where capital is relatively abundant) rather than to the DVCs (where capital is very scarce)?

4. Use Figure 16W.2 (changing the box labels as necessary) to explain rapid economic growth in a country such as South Korea or Chile. What factors other than those contained in the figure might contribute to that growth?