-Refer to Figure 8A.1. When the economy reaches K,

Name: -Refer to Figure 8A.1. When the economy reaches K,
Brand: Quizplus
Rating: 4.8 (60 reviews)

Question

Quizplus · Accepted Answer

At point K, the economy has reached its steady state where depreciation equals saving, meaning that the amount of capital being replaced due to wear and tear equals the amount of new savings being invested in capital. This implies that the capital stock remains constant, and there is no further capital deepening contributing to economic growth.