In the Solow growth model in the long run or steady state, an increase in the labour input L(0) will,
A)increase the capital stock.
B)lead to a growth of the capital stock per worker of zero.
C)not affect real output per worker.
D)all of the above.

Question

Quizplus · Accepted Answer

In the Solow growth model, in the long run or steady state, an increase in the labor input $L(0)$ will not change the capital stock per worker or real output per worker, as the model predicts convergence to a steady state where these ratios are constant. Thus, while the total capital stock may increase to accommodate the higher labor input, the capital stock per worker and real output per worker remain unchanged, making all the given statements correct.

In the Solow Growth Model in the Long Run or Steady