If the investment rate ($\gamma$)increases in the Solow model,other things held constant,then capital growth:

Question

Quizplus · Accepted Answer

In the Solow model, an increase in the investment rate (s) leads to a higher capital accumulation rate (g). This can be shown by the formula g = sy - (n+δ)k, where sy represents the investment per capita, n is the population growth rate, δ is the depreciation rate, and k is the capital per capita. As s increases, the second term on the right-hand side of the equation remains constant, while the first term increases, leading to a higher g. Therefore, an increase in s increases capital growth (choice C).

If the Investment Rate γ\gammaγ )Increases in the Solow Model,other Things Held Constant,then Capital Growth

If the Investment Rate $\gamma$ )Increases in the Solow Model,other Things Held Constant,then Capital Growth