Question
In the context of steady state growth in Solow’s model, the output growth rate overtime will be
The correct answer is
constant
Solow Model Steady State Output Growth
In the context of the Solow growth model, the steady state refers to a long-run equilibrium condition. In this state, the economy's capital stock per worker and output per worker grow at constant rates.
Key characteristics of the steady state regarding growth rates are:
- If there is no technological progress and no population growth, capital per worker and output per worker become constant (growth rate of zero).
- If there is exogenous technological progress occurring at rate g and population growth at rate n, then output per worker grows at rate g, and total output grows at rate n + g.
The defining feature of the steady state is the stability of these growth rates. They do not change over time; they remain constant. Therefore, the output growth rate in the steady state is constant.
This constant rate reflects the long-run path of the economy as described by the Solow model.
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Important Questions from Economic Growth & Development
- According to Rostow, any industry can play the role of leading sector in the take-off stage provided following conditions are met.
A. The market for the product is expanding rapidly
B. The leading sector generates secondary expansion
C. The sector has an adequate and continual supply of capital from ploughed-back profits.
D. Introduction of new techniques into the sector to increase productivity
Ε. Changes in industrial structure should be structural ones
Choose the most appropriate answer from the options given below : Match List-I with List-II:
List-I
(Concepts)List-II
(their expression)
(where, gm=manufacturing output growth, gGDP=GDP growth, Pnm=productivity in outside manufacturing,
Pm=Productivity in manufacturing)A. Kaldor's first law of growth I. Pnm = f(gm), f' > 0 B. Kaldor's second law of growth II. ȳ = ε · (u − u*) C. Kaldor's third law of growth III. gGDP = f(gm), f' > 0 D. Okun's law IV. Pm = f(gm), f' > 0 Choose the correct answer from the options given below :
- The idea of constructing poverty-weighted indices of growth is.
- In the context of neoclassical growth model, the effects of an increase in population growth rate is/are.
A. Reduction in steady-state level of capital per head
B. Increase in per capita output
C. Increase in steady state rate of growth of aggregate output
D. Decrease in capital-output ratio
Ε. An inward shift in production possibility curve.
Choose the most appropriate answer from the options given below: - Arrange the following publications in chronological order starting from the oldest to the latest.
A. "Theory of Economic Growth" by Arthur Lewis
B. "A Contribution to the Theory of Economic Growth" by Robert Solow
C. "The Stages of Economic Growth: A Non Communist Manifesto" by Walt Rostow
D. "Asian Drama: An Inquiry into the Poverty of Nations" by Gunnar Myrdal
Ε. "Strategy of Economic Development" by Albert Hirschman
Choose the correct answer from the options given below :
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