In the Solow model, with population growth:
A) there is no steady state in output per person.
B) the economy never settles down to a steady state and exhibits growth in output per person.
C) the economy eventually settles down to a steady state in output per person.
D) the economy eventually settles down to a steady state with no growth in aggregate output.
E) None of these answers is correct.

Question

Quizplus · Accepted Answer

The Solow model with population growth assumes that both output and population grow at a constant rate, but capital per worker is subject to decreasing returns. In this scenario, the economy eventually settles down to a steady state in output per person where the growth rate of output per person is zero, meaning there is no long-run economic growth.

In the Solow Model, with Population Growth