The Solow model predicts that two economies will converge if the economies start with the same:
A) capital stocks.
B) populations.
C) steady states.
D) production functions.

Question

Quizplus · Accepted Answer

The Solow model predicts that two economies will converge if they start with the same steady states, which represent the long-run equilibrium levels of capital, output, and consumption in an economy. If two economies have different initial capital stocks or populations, they may take different paths to reach their steady states, but if they have the same steady state, they will eventually converge to that same level of output and consumption per capita. Production functions are not necessarily the same across economies; they determine the relationship between inputs (such as capital and labor) and output, and can vary due to differences in technology, institutions, or natural resources.

The Solow Model Predicts That Two Economies Will Converge If