Figure 4.1
Determinants
of k/k
-In Figure 4.1, an increase in the population growth rate:
A)increases k*.
B)does not affect k*.
C)decreases k*.
D)makes k* zero.

Question

Figure 4.1
Determinants
of  k/k 
-In Figure 4.1, an increase in the population growth rate:
A)increases k*. 
B)does not affect k*. 
C)decreases k*. 
D)makes k* zero.

Quizplus · Accepted Answer

An increase in population growth rate reduces the amount of capital per worker (k*) available in the economy. This is because the production function assumes that total output is determined by two factors: capital and labor inputs. An increase in population growth rate represents an increase in the labor force, which means that there are fewer units of capital available per worker, leading to a decrease in k*.

Figure 4.1 Determinants