In equilibrium,rate of growth of capital in a simple closed economy (i.e. ,x = 0)is determined primarily by
A)the growth rate of savings.
B)the level of saving less expenditures for replacement capital.
C)per capita well-being.
D)the growth rate of replacement capital.

Question

Quizplus · Accepted Answer

In a simple closed economy, the rate of growth of capital in equilibrium is primarily determined by the level of saving less expenditures for replacement capital. This is because the net addition to the capital stock (growth of capital) is the amount of saving that is not used to replace worn-out or obsolete capital (replacement capital).

In Equilibrium,rate of Growth of Capital in a Simple Closed