In the Solow growth model of an economy with population growth but no technological change,a higher level of steady-state output per worker can be obtained by all of the following except:

Question

Quizplus · Accepted Answer

Increasing the population growth rate will not increase the steady-state output per worker in the Solow growth model. In fact, it will lead to a lower steady-state output per worker because the capital stock will have to be spread out over a larger population, reducing the capital per worker ratio. Therefore, the answer is (C) increasing the population growth rate. The other choices are correct; (A) increasing the saving rate, (B) decreasing the depreciation rate, and (D) increasing the capital per worker ratio, will all increase the steady-state output per worker in the Solow growth model.

In the Solow Growth Model of an Economy with Population