Suppose that two countries share identical technology, depreciation rate, saving rate, and population growth. However, these two countries started off with different levels of capital stock. Which of the following is/are true? (i) The country with initially smaller capital stock grows more quickly to reach the steady state compared to the country with initially larger capital stock. (ii) The country with initially smaller capital stock will have a smaller capital stock in the steady state compared to the country with initially larger capital stock. (iii) Both countries will grow at the same rate in reaching the steady state. O a. Both (i) and (ii). O b. Only (iii). O c. Only (i). O d. Cannot tell. Need more information.
Suppose that two countries share identical technology, depreciation rate, saving rate, and population growth. However, these two countries started off with different levels of capital stock. Which of the following is/are true? (i) The country with initially smaller capital stock grows more quickly to reach the steady state compared to the country with initially larger capital stock. (ii) The country with initially smaller capital stock will have a smaller capital stock in the steady state compared to the country with initially larger capital stock. (iii) Both countries will grow at the same rate in reaching the steady state. O a. Both (i) and (ii). O b. Only (iii). O c. Only (i). O d. Cannot tell. Need more information.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![Suppose that two countries share identical technology,
depreciation rate, saving rate, and population growth.
However, these two countries started off with different
levels of capital stock. Which of the following is/are
true?
(i) The country with initially smaller capital stock grows
more quickly to reach the steady state compared to the
country with initially larger capital stock.
(ii) The country with initially smaller capital stock will
have a smaller capital stock in the steady state
compared to the country with initially larger capital
stock.
(iii) Both countries will grow at the same rate in
reaching the steady state.
O a. Both (i) and (ii).
O b. Only (iii).
O c.
Only (i).
O d. Cannot tell. Need more information.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6cb0093a-b1b2-4608-9dae-2c9b3b494f46%2Ff59cb8fa-0cce-476e-99c3-7ccc8cf891cf%2Fxfo1uxu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that two countries share identical technology,
depreciation rate, saving rate, and population growth.
However, these two countries started off with different
levels of capital stock. Which of the following is/are
true?
(i) The country with initially smaller capital stock grows
more quickly to reach the steady state compared to the
country with initially larger capital stock.
(ii) The country with initially smaller capital stock will
have a smaller capital stock in the steady state
compared to the country with initially larger capital
stock.
(iii) Both countries will grow at the same rate in
reaching the steady state.
O a. Both (i) and (ii).
O b. Only (iii).
O c.
Only (i).
O d. Cannot tell. Need more information.
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