Refer to the following figure when answering the following questions. Figure 5.1: Solow Diagram -In Figure 5.1, if the economy begins with the initial capital stock at K₁, the capital stock will ________ and the economy will ________. A) decrease; grow B) increase; grow C) stay constant; shrink D) decrease; shrink E) stay constant; grow

Question

Quizplus · Accepted Answer

According to the diagram, starting at K₁, the economy will move to point KS2U2B21S2U2B0, where the capital stock has increased and the economy has grown. Therefore, the capital stock will increase and the economy will grow.

Refer to the Following Figure When Answering the Following Questions