On the Solow Diagram,an increase in population growth is shown by ________.
A)an upward shift of the depreciation plus capital dilution line
B)an upward shift of the investment function
C)an upward shift of the per-worker production function
D)a downward shift of the investment function

Question

Quizplus · Accepted Answer

An increase in population growth leads to a higher rate of capital dilution, as the same amount of capital is spread over more workers. This is represented in the Solow Diagram by an upward shift of the depreciation plus capital dilution line, indicating that more investment is needed to maintain a given level of capital per worker.

On the Solow Diagram,an Increase in Population Growth Is Shown