If a Natural Disaster Destroys a Large Portion of a Country's

question 85

Multiple Choice

If a natural disaster destroys a large portion of a country's capital stock but the saving and depreciation rates are unchanged,the Solow model predicts that the economy will grow and eventually reach:

• A)the same steady-state level of output as it would have before the disaster.
• B)a higher steady-state level of output than it would have before the disaster.
• C)a lower steady-state level of output than it would have before the disaster.
• D)Not enough information is given.
• E)None of the above is correct.

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