Figure 10-5

-In Figure 10-5 above,suppose that a "neutral" technological improvement occurs.This causes a movement of the steady-state point such as from points

Question

Figure 10-5
 
-In Figure 10-5 above,suppose that a "neutral" technological improvement occurs.This causes a movement of the steady-state point such as from points

Quizplus · Accepted Answer

A neutral technological improvement shifts the production function upwards without changing the depreciation rate. This increases both output and investment per effective worker in the economy, leading to an increase in the steady-state level of capital per effective worker from K1 to K2. Since the new steady-state point after the technological improvement is represented by point B, the movement is from point A to B.

Figure 10-5 -In Figure 10-5 Above,suppose That a "Neutral" Technological Improvement Occurs.This