When current saving and investment are just enough to equip new entrants into the labor force with the same amount of capital that the average person already in the work force uses, then
A)the economy is in a steady state
B)output per head is constant
C)capital per head is constant
D)capital is growing at the same rate as the population
E)all of the above

Question

Quizplus · Accepted Answer

When an economy is in a situation where current saving and investment are just enough to equip new entrants into the labor force with the same amount of capital as the average person already in the workforce, it implies that the economy is in a steady state. In this state, output per head and capital per head remain constant because the capital stock grows at the same rate as the population, ensuring that the capital-to-labor ratio does not change. This scenario describes a steady-state economy where per capita quantities are stable over time, hence all the given options (A, B, C, D) are correct.

When Current Saving and Investment Are Just Enough to Equip