A Small Country Has 400 Units of Capital for Each

Multiple Choice

A small country has 400 units of capital for each labor hour. This year it will produce 20 units of new capital goods, and depreciate 5 percent of its capital stock. Based on this information it should expect to have ______ growth over the next year if technological advancement occurs; otherwise it should expect to have _______.

A) positive; no growth
B) positive; positive growth but less than the amount it would have with technological advancement
C) no; negative growth
D) negative; positive growth