Refer to the scenario above. If both economies have the same depreciation rate, then which of the following statements will be true?
A) Economy A will have a greater capital stock and a lower GDP than economy B.
B) Economy A will have a greater capital stock and GDP than economy B.
C) Economy A will have a lower capital stock and GDP than economy B.
D) Economy A will have a lower capital stock and a greater GDP than economy B.
Question 2
Refer to the scenario above. If both economies have identical depreciation rate, then:
A) economy A's steady state equilibrium will lie to the left and above economy B's steady state equilibrium.
B) economy A's steady state equilibrium will lie to the right and below economy B's steady state equilibrium.
C) economy A's steady state equilibrium will lie to the left and below economy B's steady state equilibrium.
D) economy A's steady state equilibrium will lie to the right and above economy B's steady state equilibrium.
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