An economy is in a steady state if
A) depreciation is zero.
B) investment is zero.
C) net investment is positive.
D) capital and output are not changing.
E) there are diminishing returns.

Question

Quizplus · Accepted Answer

A steady state economy is characterized by a constant level of capital and output, meaning that there is no net change in the amount of capital or output over time. Depreciation and investment may still occur, but they are balanced out so that the level of capital (and therefore output) remains constant. Therefore, the correct answer is D - capital and output are not changing.

An Economy Is in a Steady State If