The Solow model assumes:
A) the capital stock is constant
B) the number of workers is growing
C) the number of workers is constant
D) the saving rate changes each period
E) the depreciation rate changes each period

Question

Quizplus · Accepted Answer

The Solow model assumes a constant number of workers, which is one of its key assumptions. It assumes that the population growth rate is exogenous and constant, so there is no growth in the number of workers. The model also assumes a constant saving rate and depreciation rate, but these are not the key assumptions. The capital stock is not necessarily constant, as it can change over time due to investment and depreciation.

The Solow Model Assumes