According to the Solow Model, if the depreciation rate is greater than the saving rate, the economy will experience a decrease in output as the economy approaches its long run equilibrium.

Question

Quizplus · Accepted Answer

In the Solow Model, the long run equilibrium occurs when the savings rate is equal to the depreciation rate. If the depreciation rate is greater than the saving rate, the economy will experience a decrease in output as the capital stock decreases over time due to depreciation, leading to a decrease in the economy's ability to produce output.

According to the Solow Model, If the Depreciation Rate Is