A8. Consider the endogenous growth model with production function Y = AK. Suppose two cconomies are identical except that economy 1 has a higher initial capital stock than cconomy 2 has. Which of the following is true on the balanced growth path? (a) the growth rate of output is higher in economy 1 (b) the growth rate of capital is higher in economy 1 (c) the level of output is higher in economy 1 (d) the capital to output ratio is higher in economy 1

A8. Consider the endogenous growth model with production function Y = AK. Suppose two cconomies are identical except that economy 1 has a higher initial capital stock than cconomy 2 has. Which of the following is true on the balanced growth path? (a) the growth rate of output is higher in economy 1 (b) the growth rate of capital is higher in economy 1 (c) the level of output is higher in economy 1 (d) the capital to output ratio is higher in economy 1

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter3: Scarcity, Trade-offs, And Production Possibilities

Section: Chapter Questions

Problem 11P

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