An implication of the Solow model is that once an economy reaches the steady state, per capita:
A) consumption is constant.
B) output is constant, but per capita capital is not.
C) capital is variable.
D) consumption continues to grow.
E) consumption is growing.

Question

Quizplus · Accepted Answer

Once an economy reaches the steady state, per capita consumption is constant. This is because the economy has achieved a balance between the production of goods and the depreciation of capital, leading to a stable level of output and consumption.

An Implication of the Solow Model Is That Once an Economy