The economy tends to approach a steady state because
A) there is a shortage of skilled workers.
B) people run out of new ideas.
C) there are diminishing returns.
D) government policies inhibit further growth.
E) there is depreciation.

Question

Quizplus · Accepted Answer

Diminishing returns occur when adding more inputs to a production process results in proportionally smaller increases in output. This tends to slow down economic growth and lead to a steadier state. The other options do not provide a clear explanation for why the economy would approach a steady state.

The Economy Tends to Approach a Steady State Because