Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital stock is
A) constant.
B) growing at a rate of gA + gN.
C) growing at a rate of gN.
D) growing at a rate of gA.
E) growing at a rate of gA - gN.

Question

Quizplus · Accepted Answer

In a balanced growth scenario, the capital stock grows at the rate of technological progress (gA) plus the rate of population growth (gN) to maintain per capita income growth and accommodate the increasing population.

Assume That an Economy Experiences Both Positive Population Growth and Technological