A change in the capital stock, $\Delta K _ { t + 1 }$ , can be expressed as a function of the saving rate, $\bar { s }$ , output $F \left( K _ { t } \bar { L } \right)$ , the capital stock, K_t, and the depreciation rate by $\bar d$ , as $\Delta K _ { t + 1 } = \bar { d } F \left( K _ { t } , \bar { L } \right) - \bar { s } K _ { t }$ .

Question

Quizplus · Accepted Answer

The correct expression for the change in capital stock should be $\Delta K _ { t + 1 } = \bar { s } F \left( K _ { t } , \bar { L } \right) - \bar { d } K _ { t }$, where savings contribute to capital accumulation and depreciation reduces it.

A Change in the Capital Stock ΔKt+1\Delta K _ { t + 1 }ΔKt+1​

A Change in the Capital Stock $\Delta K _ { t + 1 }$