World War II resulted in the destruction of much of the United Kingdom's physical capital stock.Assuming the country was in steady-state equilibrium before the war and nothing else changed,what does the Solow Model predict about the years following World War II in the United Kingdom?
A) A new steady-state equilibrium would emerge, with the current level of physical capital.
B) A new steady-state equilibrium would emerge, with a level of physical capital between the current level and the pre-war level.
C) The economy would never again reach a steady-state equilibrium.
D) The economy would eventually return to the old steady-state equilibrium, with the original level of physical capital.
Correct Answer:
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