In a steady state with population growth and technological progress:
A) the capital share of income increases.
B) the labor share of income increases.
C) the capital share of income, in some cases, increases, and sometimes the labor share increases.
D) the capital and labor shares of income are constant.

Question

Quizplus · Accepted Answer

In a steady state with population growth and technological progress, the shares of income going to capital and labor tend to remain constant. This is because the growth in technology and population typically affects both factors of production in a way that keeps their relative shares of income stable over time.

In a Steady State with Population Growth and Technological Progress