Suppose that the level of capital in the economy is 200 units,the depreciation rate is 10 percent,and the level of investment is equal to 10 units.In this case,
A) the economy is in a steady state.
B) investment is less than net investment.
C) investment is equal to net investment.
D) investment is greater than net investment.
E) the level of output will increase.

Question

Quizplus · Accepted Answer

The depreciation of capital is 20 units (10% of 200), which is greater than the investment of 10 units, leading to negative net investment.

Suppose That the Level of Capital in the Economy Is