Economies are said to have converged if they:
A)have the same growth rate in the transition.
B)have the same capital per worker, k*, in the steady state.
C)have the same saving rate.
D)all of the above.

Question

Quizplus · Accepted Answer

Convergence refers to the idea that economies with lower initial income levels will experience faster economic growth than richer economies, leading to a narrowing in income per capita. In this process, the economies should converge to the same steady state level of capital per worker, k*. Therefore, the correct answer is (B), as having the same capital per worker in the steady state is the main indicator that economies have converged. Choice (A) is incorrect, as growth rates can differ throughout the transition period. Choice (C) is also incorrect, as saving rates are not necessarily correlated with convergence.

Economies Are Said to Have Converged If They