An increase in the depreciation rate affects the steady-state capital per worker the same way as an increase in the population growth rate.

Question

Quizplus · Accepted Answer

Both an increase in the depreciation rate and an increase in the population growth rate reduce the steady-state capital per worker because they both increase the amount of investment needed to keep the capital stock per worker constant.

An Increase in the Depreciation Rate Affects the Steady-State Capital