A Small Country's Aggregate Production Function Per Hour of Labor

Multiple Choice

A small country's aggregate production function per hour of labor is given by Y = K1/2. Its depreciation rate is 5 percent and its investment rate is 25 percent. What is its steady-state level of real GDP?

A) 25
B) 5
C) 1.25
D) You need to know the steady-state level of capital stock to answer this question.