According to the Solow model,a country will grow faster when its capital stock is:
A) at the steady-state value.
B) above the steady-state value.
C) just below the steady-state value.
D) far below the steady-state value.

Question

Quizplus · Accepted Answer

The Solow model predicts that a country will experience faster growth rates when its capital stock is far below the steady-state level. This is because as the capital stock increases, the marginal product of capital will decreases and, as a result, the growth rate will slow down. However, when the capital stock is low, the marginal product of capital is high, and the growth rate will be greater.

According to the Solow Model,a Country Will Grow Faster When