Answer:
Option (d) is correct.
Explanation:
Given that,
Capital stock = 900 units
Saves 20% of its output
Depreciation rate = 10%
Production function, Y = [tex]k^{\frac{1}{2}}[/tex]
= (900)^{\frac{1}{2}}
= 30 units
Therefore, the savings is as follows,
= 20% of output
= 0.2 × 30 units
= 6 units
Hence, the savings is equal to the investment for this small economy or country.
Investment = 6 units
