In the Solow growth model with population growth and technological change, the break-even level of investment must cover:
A) depreciating capital.
B) depreciating capital and capital for new workers.
C) depreciating capital and capital for new effective workers.
D) depreciating capital, capital for new workers, and capital for new effective workers.

Question

Quizplus · Accepted Answer

In the Solow growth model with population growth and technological change, the break-even level of investment must cover depreciating capital, capital for new workers, and capital for new effective workers. This accounts for maintaining the capital stock, expanding it to accommodate a growing workforce, and enhancing it to keep up with technological advancements, ensuring that the economy can sustain its growth trajectory.

In the Solow Growth Model with Population Growth and Technological