Which of the following best answers whether growth in the labor force leads to overall economic growth?
A) Population growth can produce growth in the Solow model in the aggregate but not in output per person.
B) Total capital and production per worker can grow as the population of the economy grows.
C) It never does-only capital contributes to aggregate economic growth.
D) Population growth can produce growth in the Solow model in the aggregate and in output per person.
E) Population growth increases output per person but not aggregate output.

Question

Quizplus · Accepted Answer

Population growth can lead to growth in the aggregate economy by increasing the total labor force, which can increase total output. However, in the Solow growth model, while aggregate output may increase, output per person (per capita output) does not necessarily increase with population growth. This is because the model assumes diminishing returns to capital and labor, meaning that as the labor force grows, the additional contribution of each new worker to output becomes smaller.

Which of the Following Best Answers Whether Growth in the Labor