The Solow growth model shows that the growth rate of real GDP per worker depends on:
A)the saving rate, s
B)the growth rate of the labour force, n.
C)the depreciation rate, .
D)all of the above.

Question

The Solow growth model shows that the growth rate of real GDP per worker depends on:
A)the saving rate, s 
B)the growth rate of the labour force, n. 
C)the depreciation rate, . 
D)all of the above.

Quizplus · Accepted Answer

The Solow growth model includes all three factors as key determinants of the growth rate of real GDP per worker. These factors are: 
A) the saving rate, s, which determines the amount of capital available for each worker and therefore productivity;
B) the growth rate of the labour force, n, which determines the number of workers and therefore the potential size of the economy; and
C) the depreciation rate, delta, which reflects the natural wear and tear of equipment and technology over time and therefore the need for investment to maintain the capital stock. 
Thus, all three factors are necessary to fully explain the long-run growth trajectory of an economy.

The Solow Growth Model Shows That the Growth Rate of Real