Use the following information to answer the question(s) below:
(1) the rate of depreciation is 10% per year,
(2) the population growth rate is 2% per year, and
(3) the growth rate of technology is 3% per year.
-Refer to the information above.Which of the following represents the steady-state growth rate of output in this economy?
A)2%
B)3%
C)5%
D)10%
E) 15%

Question

Quizplus · Accepted Answer

The steady-state growth rate of output is equal to the sum of the growth rates of the factors of production that contribute to output, minus the rate of depreciation. In this case, the steady-state growth rate of output is (2%+3%) - 10% = 5%. Therefore, the answer is C, 5%.

Use the Following Information to Answer the Question(s) Below