In the Solow model, the steady-state level of output per worker is a function of:
A) productivity and the initial capital stock
B) the initial capital stock, productivity, and the saving rate
C) the initial capital stock, productivity, and the depreciation rate
D) the initial capital stock and the steady-state level of capital stock
E) productivity, the depreciation rate, and the saving rate

Question

Quizplus · Accepted Answer

In the Solow model, the steady-state level of output per worker depends on productivity, the depreciation rate, and the saving rate, as these factors determine the steady-state level of capital per worker, which in turn affects output per worker. The initial capital stock does not affect the steady-state level.

In the Solow Model, the Steady-State Level of Output Per