The capital-output ratio is equal to
A) the saving rate multiplied by the depreciation rate of capital.
B) the saving rate plus the depreciation rate of capital.
C) the saving rate minus the depreciation rate of capital.
D) the saving rate divided by the depreciation rate of capital.

Question

Quizplus · Accepted Answer

The capital-output ratio is typically defined as the amount of capital needed to produce one unit of output. In economic models, it is often represented as the ratio of capital to output, which can be influenced by the saving rate and depreciation rate, but it is not directly calculated by multiplying, adding, or subtracting these rates. The closest option is dividing the saving rate by the depreciation rate, which can relate to steady-state conditions in growth models.

The Capital-Output Ratio Is Equal to