In the Solow model, if we assume that capital depreciation rates are the same across all countries, differences in per capita output can be explained by:
A) the steady-state capital stock.
B) the initial capital stock and saving rates.
C) differences in productivity and saving rates.
D) the labor stock and saving rates.
E) None of these answers is correct.

Question

Quizplus · Accepted Answer

According to the Solow model, steady-state capital stock, initial capital stock and saving rates, labor stock and saving rates all play a role in determining per capita output. However, assuming same capital depreciation rates across all countries, the only remaining factor that can explain differences in per capita output is differences in productivity and saving rates.

In the Solow Model, If We Assume That Capital Depreciation