Peyton Bruce

Business

1 November, 23:00

An economy starts in steady state. A war causes a massive destruction of the capital stock. This shock will cause

A. the economy to converge to a new lower steady state.

B. the economy to enter a period of negative growth.

C. the growth rate of output to rise initially as the economy begins to converge to a new lower steady state.

D. the growth rate of output to rise initially as the economy begins to converge to the old steady state