In the long run,catching-up growth:
A) can continue indefinitely.
B) eventually stops when the economy reaches its steady state.
C) can explain an economy's growth in the very long run.
D) keeps the capital stock growing indefinitely,but not output.

Question

Quizplus · Accepted Answer

Catching-up growth refers to the phenomenon where a country with lower productivity levels gradually closes the gap with a more advanced economy by adopting and implementing best practices in technology and management. This process can lead to sustained growth and convergence with the advanced economy. However, in the long run, catching-up growth is expected to slow down and eventually stop when the economy reaches its steady state, where the growth rate of output equals the growth rate of the labor force and capital stock. This is because as the economy approaches its steady state, it becomes harder to achieve further productivity gains without investing in new technologies or adding more resources, which would increase the capital stock and the size of the labor force. Therefore, while catching-up growth can explain an economy's growth in the short to medium run, it cannot continue indefinitely.

In the Long Run,catching-Up Growth