Suppose s = 0.18,Y = 4000,K = 6200,n = 0.02,and d = 0.08.This makes national saving ________ than steady-state investment,so that the amount of capital per worker is ________.

Question

Quizplus · Accepted Answer

National saving is calculated as $sY$, and steady-state investment is calculated as $(n + d)K$. Here, $sY = 0.18 \times 4000 = 720$ and $(n + d)K = (0.02 + 0.08) \times 6200 = 620$. Since national saving (720) is greater than steady-state investment (620), the amount of capital per worker is rising.

Suppose S = 0