Author Question: In a steady-state economy with no population growth, capital per worker is 86, the saving rate is 25 ... (Read 102 times)

renzo156 · **on:** Jun 30, 2018

In a steady-state economy with no population growth, capital per worker is 86, the saving rate is 25 percent, and the depreciation rate is 11 percent. The level of output per worker is ________.

A) 195
B) 38
C) 35
D) 47

Question 2

Two countries are experiencing 10 money growth a year. However, country A is growing at 2 and country B is growing at 5. Which country will have the higher inflation rate?

What will be an ideal response?

mammy1697 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

B

Answer to Question 2

According to the quantity theory, countries with a higher level of output will have a lower price level holding the money supply and velocity constant. As a result, the faster growing country will experience lower inflation.