Consider an economy with production function Y = K1/2, an investment rate equal to 0.25, and a depreciation rate of 0.05. If K = 1,000 this period, the capital stock next period will be:
A) equal to 1,000.
B) greater than 1,000.
C) less than 1,000.
D) greater than 1,200.
Correct Answer:
Verified
Q94: Over time, capital wears out. The official
Q95: All else equal, an increase in savings
Q96: If the production function in a country
Q97: What is meant by the "steady-state" level
Q98: When investment is equal to depreciation, the
Q100: All else equal, an increase in savings
Q101: A country in a steady state
Q102: Consider an economy described by the
Q103: A small country's aggregate production function per
Q104: Use the following to answer questions: Figure:
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents