According to the principle of transition dynamics, we should expect China's economy to:
A) grow at a relatively high rate forever.
B) grow relatively slowly now but speed up over time.
C) grow relatively fast now but slow down over time.
D) catch up to the United States in the next 50 years or so.
E) reach its steady state by the year 2100.

Question

Quizplus · Accepted Answer

According to the principle of transition dynamics, as a country moves from a low-income to a high-income economy, its growth rate will initially be relatively high but will slow down over time. This is due to the diminishing returns of investments in physical capital and productivity improvements as the economy reaches higher levels of development. Therefore, we can expect China's growth rate to slow down over time as it continues to develop and approaches the income levels of more developed countries.

According to the Principle of Transition Dynamics, We Should Expect