The "nonconvergence" problem with the Solow growth model is that
A)a higher return to capital in poor countries should essentially cause all nations to have roughly the same standard of living,yet they clearly do not.
B)if a disturbance dislodges an economy from the steady-state point,it continues moving further from that point indefinitely.
C)technological change is assumed to just "drop from the sky."
D)a rise in the rate of national saving does not raise the growth rate of real GDP per person.

Question

Quizplus · Accepted Answer

The "nonconvergence" problem refers to the observation that despite the Solow growth model's prediction of convergence due to higher returns to capital in poorer countries (which should theoretically equalize standards of living across nations), in reality, countries do not exhibit this uniformity in living standards.

The "Nonconvergence" Problem with the Solow Growth Model Is That