In the graph of the Solow growth model,at any point to the left of the steady-state intersection we have national saving per person ________ than steady-state investment per person,causing (K/N)to ________.
A)greater,increase
B)greater,decrease
C)less,increase
D)less,decrease

Question

Quizplus · Accepted Answer

In the Solow growth model, at any point to the left of the steady-state intersection, national saving per person is greater than steady-state investment per person. This excess of savings over investment leads to an accumulation of capital, causing the capital per worker (K/N) to increase until it reaches the steady state.

In the Graph of the Solow Growth Model,at Any Point