Assume two economies are identical in every way except that one has a higher saving rate.According to the Solow growth model,in the steady state the country with the higher saving rate will have ______ level of total output and ______ rate of growth of output per worker as/than the country with the lower saving rate.

Question

Quizplus · Accepted Answer

In the Solow growth model, a higher saving rate leads to a higher level of capital accumulation, resulting in a higher level of total output in the steady state. However, the growth rate of output per worker in the steady state is determined by the rate of technological progress, which is the same for both countries, so the growth rate remains the same.

Assume Two Economies Are Identical in Every Way Except That