The equilibrium condition for balanced growth is
A) the value of the savings rate multiplied by the sum of the labor force growth rate, the growth rate of the efficiency of labor, and the depreciation of capital.
B) the value of the savings rate divided by the sum of the labor force growth rate, the growth rate of the efficiency of labor, and the depreciation of capital.
C) the value of the savings rate minus the sum of the labor force growth rate, the growth rate of the efficiency of labor, and the depreciation of capital.
D) the value of the savings rate plus the sum of the labor force growth rate, the growth rate of the efficiency of labor, and the depreciation of capital.

Question

Quizplus · Accepted Answer

The equilibrium condition for balanced growth in many economic models, such as the Solow-Swan model, is given by the savings rate divided by the sum of the labor force growth rate, the growth rate of the efficiency of labor, and the depreciation of capital. This ratio determines the steady-state level of capital per effective worker, ensuring that the economy grows at a rate that can be sustained in the long run.

The Equilibrium Condition for Balanced Growth Is