Long-run growth in the standard of living in the Solow growth model is explained by

Question

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The Solow growth model suggests that long-run growth in the standard of living is explained by technological change. While growth in the capital stock initially contributes to economic growth, eventually diminishing returns set in and the rate of growth slows. Technological progress, on the other hand, can continue to drive economic growth even as the capital stock reaches a steady state. Consumption spending, government sector changes, and growth in government do not play a significant role in the Solow growth model.

Long-Run Growth in the Standard of Living in the Solow