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Consider two economies are identical in terms of having the same saving rates, population growth rates,...

  1. Consider two economies are identical in terms of having the same saving rates, population growth rates, and efficiency of labor. However, let's assume one economy has a smaller capital stock. Then the steady-state level of output per worker in the economy with the smaller capital stock will be at the same level as in the steady state of the high capital economy.

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Consider two economies are identical in terms of having the same saving rates, population growth rates, and efficiency of labor. However, let's assume one economy has a smaller capital stock. Then the steady-state level of output per worker in the economy with the smaller capital stock will be at the same level as in the steady state of the high capital economy - FALSE

When everything else remains same except for the capital stock i.e investment rate is different. Economy with higher investment rate means capital stock rises faster than in the other economy and so does the consumption. Steady state of economy with higher investment rate will be quite above than the economy with lower investment rate.

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