Question 1 (14 points)

a) Use one word to explain why the USA's living standard is so much higher than China's living standard. b) China is the second-largest economy in the world, slightly behind the United States. However, the Chinese living standard is well below the American living standard. How can those two facts be reconciled?

c) China's saving rate is much higher than the USA's saving rate. Based only on this, which economy do you expect will grow the fastest? Explain. What is the cost of a very high saving rate?