In the Solow growth model in the long run or steady state, an increase in the labour input L(0) will,
A)decrease the capital stock.
B)lead to a positive growth of the capital stock per worker.
C)not change 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)) does not change real output per worker because the model predicts that the economy will adjust to a new steady state where the output per worker returns to its original level.

In the Solow Growth Model in the Long Run or Steady