In the steady state of Solow's exogenous growth model, an increase in total factor productivity

Question

Quizplus · Accepted Answer

In the steady-state of Solow's exogenous growth model, an increase in total factor productivity leads to an increase in output per worker and an increase in capital per worker. This is because an increase in productivity means that with the same amount of capital and labor, more output can be produced. Therefore, firms will want to invest in more capital to take advantage of the increased productivity, leading to an increase in capital per worker.

In the Steady State of Solow's Exogenous Growth Model, an Increase