The consumption function in the Solow model assumes that society saves a:
A) constant proportion of income.
B) smaller proportion of income as it becomes richer.
C) larger proportion of income as it becomes richer.
D) larger proportion of income when the interest rate is higher.

Question

Quizplus · Accepted Answer

The Solow model assumes that society saves a constant proportion of its income, which is a key feature of the model's simplicity and its focus on long-term economic growth.

The Consumption Function in the Solow Model Assumes That Society