We consider a country characterized by the following parameters: Initial Total Factor Productivity (PTF): 1, average annual growth rate of PTF: 2%, propensity to save: 40%, average annual population growth rate: 1%, annual depreciation rate of capital: 10%, share of capital: 40%. If the current effective capital per capita is equal to 5, what is approximately the growth rate of effective capital per capita? Note: we cannot use the calculation method based on the speed of beta convergence because the gap between the current situation and the equilibrium is too large to consider that we are in the vicinity of the equilibrium."

Question 1
Please choose one answer.

a. +1.4%

b. -0.3%

c. +2.2%

d. +2.8%