Assume that two economies are identical in every way except that one has a higher population growth rate. According to the Solow growth model, in the steady state, the country with the higher population growth rate will have a _____ level of output per person and _____ rate of growth of output per worker compared to the country with the lower population growth rate.

Question

Quizplus · Accepted Answer

In the Solow growth model, a higher population growth rate leads to a lower steady-state level of output per person because more resources are needed to equip the larger population. However, the growth rate of output per worker in the steady state is determined by the rate of technological progress, which is the same for both countries, so it remains the same.

Assume That Two Economies Are Identical in Every Way Except