Based on the Solow model,an earthquake that destroys half the capital stock in a country will decrease growth in the years following the disaster.

Question

Quizplus · Accepted Answer

According to the Solow model, an earthquake that destroys half the capital stock would initially decrease output, but it would increase the growth rate temporarily as the economy rebuilds its capital stock towards the steady state.

Based on the Solow Model,an Earthquake That Destroys Half the Capital