The Solow model suggests that economies with the same aggregate production function,ratio of workers to the total population and saving rates will ________.
A)trade with one another
B)start with different initial levels of per capita income
C)possess the same rate of depreciation
D)experience convergence

Question

Quizplus · Accepted Answer

The Solow model predicts that economies with the same aggregate production function, ratio of workers to the total population, and saving rates will eventually experience convergence, meaning that their per capita income levels will tend to equalize over time. However, they may start with different initial levels of per capita income due to factors such as historical legacies or differences in technology. Their rates of depreciation may also differ depending on the quality of their capital stock. Trade may occur between these economies but it is not a direct prediction of the Solow model.

The Solow Model Suggests That Economies with the Same Aggregate