Use the following information to answer the question(s) below:
6 = 0.13
gA = 0.05
gN = 0.04
-Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that growth rate of K/AN is:
A) gA / gN.
B) 0.
C) gA + gN.
D) gA.
E) gA - gN.

Question

Quizplus · Accepted Answer

In a balanced growth path, the growth rate of capital per effective worker (K/AN) is zero. This is because both capital and effective labor (AN, where A represents technology and N represents the labor force) grow at the same rate, ensuring that the ratio of K to AN remains constant over time.

Use the Following Information to Answer the Question(s) Below