Which of the following is most likely if there is a war that destroys a country's stock of physical capital to a level below the steady-state equilibrium?

Question

Quizplus · Accepted Answer

In a situation where a war destroys a country's stock of physical capital below the steady-state equilibrium level, the investment in physical capital will be lower than the amount required to replenish the depreciating physical capital. This means that the country will have a reduced capital stock and thus, the GDP will be lower than the steady-state equilibrium level of GDP. Therefore, option D is the most likely outcome.

Which of the Following Is Most Likely If There Is