If we define the saving rate as $\bar { s }$ , output as $F \left( K _ { t } , \bar { L } \right)$
, and the depreciation rate as $\bar { d }$
, and if $\bar { s } { F } \left( K _ { t } , \bar { L } \right) \bar { d } K _ { t }$
, the economy is:
A) contracting
B) at the steady state
C) growing
D) in its short-run equilibrium
E) None of these answers are correct.

Question

If we define the saving rate as $\bar { s }$ , output as $F \left( K _ { t } , \bar { L } \right)$
, and the depreciation rate as $\bar { d }$
, and if $\bar { s }  { F } \left( K _ { t } , \bar { L } \right) > \bar { d } K _ { t }$
, the economy is:
A) contracting
B) at the steady state
C) growing
D) in its short-run equilibrium
E) None of these answers are correct.

Quizplus · Accepted Answer

If the saving rate times output is greater than the depreciation rate times capital, the economy is growing because investment exceeds depreciation, leading to an increase in capital stock and output.

If We Define the Saving Rate As sˉ\bar { s }sˉ

If We Define the Saving Rate As $\bar { s }$