In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per effective worker grows at a percent rate.
A)0
B)2
C)3
D)5

Question

Quizplus · Accepted Answer

In the Solow model with technological change, output per effective worker in the steady state does not grow; it remains constant. Hence, the growth rate is 0 percent.

In a Solow Model with Technological Change, If Population Grows