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Consider Solow Growth Model with Production Function of Y =

Question 83

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Consider Solow growth model with production function of y = k1/2, where y is the output per labour and k is the capital per labour. Assume that the rate of depreciation of capital stock is zero. If propensity to save is 0.4 and the growth of labour force is 10%, then:


A) Steady-state capital-output ratio is 4.
B) Steady-state capital per labour is 4.
C) Steady-state consumption per labour is 1.6.
D) Steady-state capital per labour is zero, since depreciation rate is zero.

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