During the transition to the steady state in the Solow growth model:
A)the output per worker rises.
B)the capital to labour ratio rises.
C)the rate of growth of capital falls.
D)all of the above.

Question

Quizplus · Accepted Answer

During the transition to steady state, the output per worker rises as capital stock increases; the capital to labour ratio rises as the growth rate of labour is assumed to be constant and the rate of growth of capital falls as investment gradually reaches a steady-state level. Therefore, all three options are correct.

During the Transition to the Steady State in the Solow