An implication of the Solow growth model is that:

Question

Quizplus · Accepted Answer

The Solow growth model suggests that the economy will move towards its steady state, where output per worker is maximized, but it does not necessarily imply that the optimal saving rate will automatically be reached. Therefore, there may be a role for governments to play in promoting growth and moving the economy towards its steady state. Option A and D are incorrect because the Solow model does not assume that optimal saving rates are automatically achieved, and there can be too much saving if it results in diminishing returns. Option C is partially correct but does not address the role of governments in achieving the steady-state level.

An Implication of the Solow Growth Model Is That