Consider Solow growth model with production function of y = k^1/2 =5, 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 the growth of labour force is 10%, then the steady-state marginal propensity to save is:

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In the Solow model, the steady-state condition is when investment equals depreciation plus the growth of the labor force. With zero depreciation, the steady-state condition is s * f(k) = n * k, where s is the saving rate, f(k) is the production function, and n is the growth rate of labor. Given y = k^1/2 = 5, k = 25. With n = 0.1, s = n * k / f(k) = 0.1 * 25 / 5 = 0.5.

Consider Solow Growth Model with Production Function of Y =