In the Solow model, better ideas will lead to
A) more capital.
B) less government regulation.
C) a constant stream of output.
D) less capital.

Question

Quizplus · Accepted Answer

In the Solow model, better ideas lead to more capital due to the concept of technological progress. As better ideas are developed and implemented, productivity increases, which leads to higher profits and savings. These savings are then used to investment in capital, which leads to increased output and economic growth.

In the Solow Model, Better Ideas Will Lead to