The Solow model suggests that initially poor countries with steady-state levels of output ______ richer countries will grow ______ richer countries.
A) similar to; faster than
B) similar to; slower than
C) lower than; at the same rate as
D) higher than; slower than

Question

Quizplus · Accepted Answer

The Solow model suggests that initially poor countries with steady-state levels of output will grow faster than richer countries. This is because poor countries have more room for improvement and can benefit from technological advances and the transfer of knowledge and ideas from richer countries. As they adopt new technologies and improve productivity, their output levels can grow at a faster rate than those of richer countries, which may already be closer to their maximum potential output levels.

The Solow Model Suggests That Initially Poor Countries with Steady-State