-(Figure: the Solow Model)In the Accompanying Graph of the Solow

question 137

Multiple Choice

-(Figure: The Solow Model) In the accompanying graph of the Solow model,if the production function shifts from Y₁ to Y₂ while capital remains at K₁,then the capital stock will:

• A) decrease until it reaches the new steady-state level.
• B) increase until it reaches the new steady-state level.
• C) increase for a time and then return to K₁.
• D) remain unchanged.