With steady state growth:
A)the optimal output per worker and capital per worker grow at the same rate.
B)the steady state growth rate of real GDP per worker is equal to the rate of technological progress.
C)the average product of capital falls.
D)all of the above.

Question

Quizplus · Accepted Answer

With steady state growth, the economy reaches a point where the capital per worker ratio stops growing and output per worker stops increasing. In this state, the optimal output per worker and capital per worker grow at the same rate, which is the rate of technological progress. The average product of capital may fall initially as the economy transitions to the steady state, but it will stabilize in the steady state. Therefore, only choice A is correct.

With Steady State Growth