In the revised version of the Solow growth model the optimal level of capital stock per worker depends on:
A)the saving rating.
B)the depreciation rate.
C)population growth rate.
D)all of the above.

Question

Quizplus · Accepted Answer

In the revised Solow growth model, the optimal level of capital stock per worker depends on all three factors: the saving rate, the depreciation rate, and the population growth rate. A higher saving rate leads to a higher steady-state level of capital stock per worker, while a higher depreciation rate leads to a lower steady-state level of capital stock per worker. Finally, a higher population growth rate leads to a lower steady-state level of capital stock per worker as the increase in the number of workers outpaces the increase in capital stock. Therefore, all three factors are important in determining the optimal level of capital stock per worker.

In the Revised Version of the Solow Growth Model the Optimal