Answer :

Final answer:

The change in capital stock per worker equals savings per worker minus depreciation. This can be represented as ΔK/N = S/N - dK. The equation S + (M-X) = I + (G-T) is a representation of the national saving and investment identity.

Explanation:

In the context of economics, the change in capital stock per worker is typically expressed as the difference between savings per worker and depreciation. Here, savings per worker refers to the amount of capital saved for each worker, while depreciation pertains to the decrease in value of the capital stock over time due to wear and tear, obsolescence or exhaustion.

Mathematically, this concept can be represented as: ΔK/N = S/N - dK where ΔK is the change in capital stock, N is the number of workers, S is the total savings, and dK is the depreciation of capital.

In the provided equation, Quantity supplied of financial capital = Quantity demanded of financial capital, 'S + (M-X) = I + (G-T)', it reflects the identity of national saving and investment. 'S' represents private savings, 'M-X' represents inflow of foreign savings, 'I' represents private investment, and 'G-T' is the Government budget deficit. It's saying that the total capital supplied (savings) is equal to the total capital demanded (investments and deficits).

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