Consider a Small Country with a Capital Stock Equal to 900

question 72

Multiple Choice

Consider a small country with a capital stock equal to 900 units. This year it produced 20 units of new capital goods, with a depreciation rate of 10% and a production function of Y = K^1/2. If there is no technological advancement, what will the growth rate in this country be over the next year?

• A) -4.13%
• B) -3.97%
• C) 2.4%
• D) 10%