If two economies are identical (including having the same saving rates,population growth rates,and efficiency of labour),but one economy has a smaller capital stock,then the steady-state level of income per worker in the economy with the smaller capital stock will be:

Question

Quizplus · Accepted Answer

In the Solow growth model, if two economies are identical in all aspects except for their initial capital stock, they will eventually converge to the same steady-state level of income per worker. The initial difference in capital stock affects the path to the steady state but not the steady-state level itself.

If Two Economies Are Identical (Including Having the Same Saving