Question

2. The United States has been at or near the steady state for quite some time and yet the economy stll grows. What might account for this? 3. If a country has a natural disaster which destroys much of its physical capital, what do you expect to happen to the level of output and what do you expect to happen to the rate of economic growth?

Answer 1

Answer: 2

The United States has been at or near the steady state for quite some time and yet the economy still grows because the economy has maintained the equilibrium between the population growth and the growth of production in the economy. The factor of production are being used efficiently due to the economy is growing as there is steady growth of population so economy does not have over burden of population.

The steady state of an economy means there is a balance between different economic factors and they are growing at a slow or constant rate.   

answer: 3

If a country has a natural disaster which destroys much of its physical capital then the level of output will decrease in the country because if the physical capital will be destroyed than the production will reduce while the aggregate demand will be high it will raise the problem of shortage in the economy as supply will not be able to fulfil the market demand, prices will increase in the economy the value of money will decrease economy may suffer inflation the economic activities will decrease due to disaster and the rate of economic growth will decline.