International data suggest that economies of countries with different steady states will converge to:

Question

Quizplus · Accepted Answer

The concept of convergence refers to the tendency of economies with different initial conditions or steady states to eventually move towards their own steady state. This is supported by empirical data on economic growth across countries. While the Golden Rule steady state may represent an optimal level of consumption and capital accumulation, it is not necessarily the outcome towards which all economies converge. Additionally, steady states below the Golden Rule level may imply low levels of capital and output per worker, which is not desirable. Therefore, the best answer is B – economies will converge to their own steady state, which may differ across countries depending on their initial conditions and productivity levels.

International Data Suggest That Economies of Countries with Different Steady