The key insight in the Solow model is that:
A) saving rates are determined in a particular manner.
B) savings have no impact on economic growth.
C) capital depreciation enhances economic growth.
D) the relationship between capital and output is static.
E) capital accumulation contributes to economic growth.

Question

Quizplus · Accepted Answer

The key insight in the Solow model is that capital accumulation contributes to economic growth. The model emphasizes the importance of capital accumulation as a driver of economic growth, showing that increased investment and savings can lead to sustained growth in GDP per capita in a steady state economy.

The Key Insight in the Solow Model Is That