An increase in the growth rate of population in a steady-state economy would cause
A)a parallel shift upward in the investment line.
B)a pivot up and to the left in the investment line.
C)a pivot down and to the right in the investment line.
D)a parallel shift downward in the investment line.

Question

Quizplus · Accepted Answer

In a steady-state economy, the investment and depreciation rates are equal to maintain a constant level of capital. An increase in the growth rate of the population would result in an increase in the demand for goods and services, leading to an increase in investment to fulfill that demand. As a result, the investment line would pivot up and to the left, indicating a higher level of investment needed to maintain the steady-state economy.

An Increase in the Growth Rate of Population in a Steady-State