In a steady-state balanced-growth equilibrium, each of the following is true except
A) the capital intensity of the economy is stable.
B) the economy's capital stock and its level of real GDP are growing at the same proportional rate.
C) the capital-output ratio is constant.
D) the capital-output ratio is increasing.

Question

Quizplus · Accepted Answer

In a steady-state balanced-growth equilibrium, the capital-output ratio remains constant, not increasing. This means that while both capital stock and real GDP are growing, they do so at the same rate, keeping their ratio stable.

In a Steady-State Balanced-Growth Equilibrium, Each of the Following Is