-(Figure: the Solow Model)If the Production Function Shifts from Y₁

Multiple Choice

-(Figure: The Solow Model) If the production function shifts from Y₁ to Y₂ in the accompanying graph of the Solow model,then:

A) the steady state will remain at K₁.
B) a new steady state will occur at K₂.
C) the steady state will move to K₂ and then return to K₁ in the long run.
D) a new steady state will occur somewhere between K₁ and K₂.