Suppose the economy is operating at the steady state and that there is no technological progress. Which of the following is true given this information?
A) The growth of output per worker is equal to the rate of saving.
B) The growth of output per worker is positive.
C) The growth of output per worker is equal to the rate of investment.
D) The growth of output per worker is zero.
E) The growth of output per worker is equal to the rate of depreciation.

Question

Quizplus · Accepted Answer

If the economy is operating at the steady state and there is no technological progress, then output per worker is not increasing over time. Therefore, the growth of output per worker is zero. This is because the steady state is a situation in which the economy is producing its potential output given its level of capital and labor, and there is no growth in either. While saving, investment, and depreciation may affect the level of capital and output, they do not affect the growth rate of output per worker in this scenario.

Suppose the Economy Is Operating at the Steady State and That