If Two Economies Are Identical (Including Having the Same Saving

question 26

Multiple Choice

If two economies are identical (including having the same saving rates, population growth rates, and efficiency of labor) , but one economy has a smaller capital stock, then the steady-state level of income per worker in the economy with the smaller capital stock:

• A)will be at a lower level than the steady state of the high capital economy.
• B)will be at a higher level than the steady state of the high capital economy.
• C)will be at the same level as the steady state of the high capital economy.
• D)will be proportional to the ratio of the capital stocks in the two economies.

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