Which of the following best describes a steady state?
A)Political stability is maintained by the state.
B)The standard of living is increasing at a stable rate.
C)Each firm in the economy receives a steady stream of income.
D)Output per worker, consumption per worker, and capital per worker are constant.

Question

Quizplus · Accepted Answer

A steady state refers to a situation in which key economic variables such as output per worker, consumption per worker and capital per worker remain constant over time. This occurs when the investment rate is equal to the rate of depreciation of capital, leading to a stable level of output and consumption. Option A refers to political stability, which is a different concept. Option B refers to economic growth, which involves an increase in the output of goods and services over time. Option C is not necessarily true in a steady state as some firms may experience fluctuations in income due to market conditions.

Which of the Following Best Describes a Steady State