Question

Two economies that start off with different capital stocks but the same steady state will converge....

Two economies that start off with different capital stocks but the same steady state will converge.

true or false?

Homework Answers

Answer #1

False,

Answer should be false here, because if there is startoff with two different capital stocks but with the same steady state, will never converge at any anytime. Some low-income and middle-income economies around the world have shown a pattern of convergence, in which their economies grow faster than those of high-income countries.

The high capital stocks will be high with the time at that steady speed, so there is no point where they both can converge.a

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