I don’t understand the answer Schweser is giving and would like someone to give an opinion on that.
Practice exam 2 (morning) question 7:
Countries: Procken (developing) alpha 32.5%, Krosse (developing) 35%, and Weira (developed) 25%.
Question: Which country is most likely to benefit from capital deepening?
My answer: Procken
Schweser answer: Krosse, a nation with a highest alpha among all the countries. A high value of alpha indicates that the next unit of capital added will increase output almost as much as the previous unit of capital.
That’s completely the opposite of what curriculum says: country with high alpha has less marginal benefit from extra unit of capital and will finally reach the steady state as the capital will reach certain level.
I am very confused with their answer.