-(Figure: the Solow Model)If the Production Function Shifts from Y₁

question 155

Multiple Choice

-(Figure: The Solow Model) If the production function shifts from Y₁ to Y₂ in the accompanying graph of the Solow model,then:

• A) the steady state will remain at K₁.
• B) a new steady state will occur at K₂.
• C) the steady state will move to K₂ and then return to K₁ in the long run.
• D) a new steady state will occur somewhere between K₁ and K₂.

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