Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved?
A) AN.
B) Y.
C) K/N.
D) Y/AN.
E) K.

Question

Quizplus · Accepted Answer

When balanced growth is achieved, the variables will grow at the same rate so the ratio of output per worker (Y/AN) will remain constant. The level of capital per worker (K/N) will likely increase, but not necessarily at a constant rate. Therefore, the best choice is D.

Assume That an Economy Experiences Both Positive Population Growth and Technological