12. Suppose an economy represented by the graph below started with K = 25, so it was in a steady state, but then disaster struck and most of the capital was destroyed. (Assume that no people were hurt so the labor force is the same size.) dK 25 K After the disaster would we expect the economy to grow or shrink? a. grow, I> dK b. grow, I< dK C. shrink, I> dK d. shrink, I< dK

12. Suppose an economy represented by the graph below started with K = 25, so it was in a steady state, but then disaster struck and most of the capital was destroyed. (Assume that no people were hurt so the labor force is the same size.) dK 25 K After the disaster would we expect the economy to grow or shrink? a. grow, I> dK b. grow, I< dK C. shrink, I> dK d. shrink, I< dK

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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