As a country approaches the steady state,the returns to capital
A) increase.
B) decrease.
C) turn negative.
D) become equal to zero.
E) are unaffected.

Question

Quizplus · Accepted Answer

As a country approaches the steady state, the returns to capital decrease. This is because in the steady state, the amount of capital per worker is at its highest point, leading to diminishing returns to additional capital. As a result, the marginal product of capital decreases, causing the returns to capital to decrease.

As a Country Approaches the Steady State,the Returns to Capital