If the actual capital-labour ratio is below the steady-state capital-labour ratio,growth from convergence will be ________,and the economy will grow ________ than it will along a balanced growth path.

Question

Quizplus · Accepted Answer

If the actual capital-labour ratio is below the steady-state capital-labour ratio, growth from convergence will be positive as the economy is moving towards the steady state. Additionally, the economy will grow faster than it will along a balanced growth path as it is trying to catch up to the steady-state capital-labour ratio.

If the Actual Capital-Labour Ratio Is Below the Steady-State Capital-Labour