If the saving rate is 1 (i.e., s = 1), we know that: a. Capital per...
If the saving rate is 1 (i.e., s = 1), we know that:
a. Capital per worker, K/N = 0.
b. Output per worker, Y/N = depreciation per worker.
c. Consumption per worker, C/N, will be at its highest level.
d. Output per worker, Y/N = 0.
Homework Answers
Answer
The correct answer is (b) Output per worker, Y/N = depreciation per worker.
Formula :
where 
= Change in
capital per worker, s = saving rate = 1, y = Y/N = Output/worker
and d = Depreciation per worker
Steady state occurs when = 0
Hence we have :
= 0
=> sy = d
As s = 1 => 1*y = d
=> y = D
=> Output per per worker = Depreciation per worker.
Thus, When s = saving rate = 1 and steady state occurs then Output per per worker = Depreciation per worker.
Hence, the correct answer is (b) Output per worker, Y/N = depreciation per worker.
Add Answer to:
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