Business I / Eigenvalues and Eigenvectors
Practice question · True or false

If all eigenvalues of a transition matrix have magnitude greater than 1, the dynamic system converges to a steady state.

Hints
  1. What does repeated multiplication do to each eigen-direction?
  2. Magnitude above 1 grows without bound.
Show the answer

False

Why

False. Convergence needs every eigenvalue's magnitude below 1: each application scales its eigen-direction by λ\lambda, so λ>1|\lambda| > 1 makes that component grow without limit and the system diverges. The largest magnitude decides stability, which is why it alone is worth computing.

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