Figure 10-3
-Initially, the economy is at point B in the figure above We may conclude that over time

Question

Figure 10-3 
-Initially, the economy is at point B in the figure above We may conclude that over time

Quizplus · Accepted Answer

Point B represents a situation where per capita savings and steady state investment are equal. As per capita savings exceed steady state investment (point C is greater than point D), per person capital will grow from point D to E. Therefore, choice B is correct. Choices A, C, and D are incorrect because they assume that per person saving and steady state investment will remain stable, but this is not necessarily the case given the information provided in the figure.

Figure 10-3 -Initially, the Economy Is at Point B in the Figure