In a steady-state economy with no population growth,consumption per worker is 45,the saving rate is 25 percent,and the depreciation rate is 15 percent.The level of capital per worker is ________.
A)75
B)36
C)100
D)27

Question

Quizplus · Accepted Answer

In a steady-state economy, the stock of capital remains constant over time. Given the consumption per worker as 45, the saving rate as 25%, and the depreciation rate as 15%, we can calculate the level of capital per worker as follows:

Saving per worker = 0.25 x 45 = 11.25

Depreciation per worker = 0.15 x C, where C is the level of capital per worker

In a steady-state economy, saving per worker must be equal to depreciation per worker:

11.25 = 0.15C

C = 75

Therefore, the level of capital per worker is 75, which is answer choice C.

In a Steady-State Economy with No Population Growth,consumption Per Worker