Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the output per effective worker (Y/AN) is
A) growing at a rate of gA - gN.
B) growing at a rate of gN.
C) growing at a rate of 0.
D) growing at a rate of gA + gN.
E) growing at a rate of gA.

Question

Quizplus · Accepted Answer

In a balanced growth path, output per effective worker (Y/AN) is constant, meaning it grows at a rate of 0. This is because both the population (N) and technology (A) grow, but the growth in output is adjusted for these effects, leading to a steady state where output per effective worker does not change.

Assume That an Economy Experiences Both Positive Population Growth and Technological