Many policymakers are concerned that Americans do not save enough. Using the Solow growth model of an economy with no technological change and no population growth, explain why:
a. for a given production function and depreciation rate, the saving rate determines the level of output per worker.
b. a higher saving rate will not necessarily generate more consumption per worker. c. a higher saving rate will not produce a faster steady-state growth rate of output
per worker.

Question

Quizplus · Accepted Answer

The Answer of Many policymakers are concerned that Americans do not save enough. Using the Solow growth model of an economy with no technological change and no population growth, explain why:
a. for a given production function and depreciation rate, the saving rate determines the level of output per worker.
b. a higher saving rate will not necessarily generate more consumption per worker. c. a higher saving rate will not produce a faster steady-state growth rate of output
per worker.

Many Policymakers Are Concerned That Americans Do Not Save Enough