If the depreciation rate in an economy is 10 percent and the physical capital stock in the economy is $1,000,the level of investment required to keep the economy at a steady state is equal to ________.

Question

Quizplus · Accepted Answer

To maintain the economy at a steady state, the level of investment must equal the depreciation of the physical capital stock. With a depreciation rate of 10 percent and a capital stock of $1,000, the depreciation is $1,000 * 0.10 = $100. Therefore, an investment of $100 is required to keep the economy at a steady state.

If the Depreciation Rate in an Economy Is 10 Percent