Question

Suppose that the rate of depreciation is 5% per year, the population growth rate is 4% per year, and the growth rate of technology is 2% per year. Then the steady-state growth rate of output is

Answer 1

Answer: 6%

Step-by-step explanation:

Given that,

Rate of depreciation = 5% per year

Population growth rate (n) = 4% per year

Growth rate of technology (g) = 2% per year

Steady state growth rate of output = n + g

= 4% + 2%

= 6%

Therefore, the steady-state growth rate of output is 6%.