Explanation : The benefit of an additional unit of capital in emerging market countries
is much higher than the benefit of an additional unit of capital in
developed countries. This is because developed countries have a much
higher level of capital relative to emerging market countries.
Explanation : The peak phase is characterized by deceleration of economic activity,
acceleration of inflation and a slowdown in hiring rate. During early
expansion, Gross domestic product (GDP), industrial production, and
other measures of economic activity turn from decline to expansion;
layoffs slow (and net e Employment turns positive), but new hiring
does not yet occur and the unemployment rate remains high; consumer
and business spending starts rising; Inflation remains moderate and
may continue to fall. During late expansion, GDP, industrial production,
and other measures of economic activity show an accelerating rate of
growth; Business begins full time rehiring as overtime hours rise. The
unemployment rate falls to low levels; consumer and business spending
starts rising; Inflation picks up modestly.