Introduction to Economics 2 Deneme Sınavı Sorusu #350030
Which one of the following is about the Solow Growth Model of economy?
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It relates an economy’s growth rate to its capital stock.
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It emphasizes how positive changes in investment spending causes an increase in an economy’s productive capacity.
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It explains the sources of productivity growth and the growth rate of output endogenously.
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It implies that the rate of productivity improvement is the dominant factor determining how quickly living standards rise |
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It adds the accumulation of human capital to the initial variables. |
The Solow growth model implies that, with no productivity growth, the economy reaches a steady state, with constant capital-labor ratio, output per worker, and consumption per worker and the fundamental determinants of long-run living standards are the saving rate, population growth and productivity growth. The model also implies that the rate of productivity improvement is the dominant factor determining how quickly living standards rise and that an increase in the saving rate has no impact on the long-run rate of economic growth.
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