Suppose there are two very similar countries (call them Countries A and B). Both

Question

Suppose there are two very similar countries (call them Countries A and B). Both countries have the same population and neither is experiencing population growth (that is, N is identical and constant in both countries), they both depreciate capital at the same rate (d), they both save at the same saving rate (s), and there is no technological progress in either country. Suppose that we observe that Country A currently has twice the amount of capital that Country B has. True or false. If Country A is in steady state, country B is not in steady state. True False Suppose there are two very similar countries (call them Countries A and B). Both countries have the same population and neither is experiencing population growth (that is, N is identical and constant in both countries), they both depreciate capital at the same rate (d), they both save at the same saving rate (s), and there is no technological progress in either country Suppose that we observe that Country A currently has twice the amount of capital that Country B has. True or false. If Country A is in steady state, Country B currently depreciates capital faster than it saves capital. True False

Explanation / Answer

1. True.

2. True.

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