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
- The following Economics Terms can be arrange in chronological order on the basis of the concept development :
(i) Scarcity definition.
(ii)wealth definition
(iii)Growth definition.
(iv) welfare definition. - What is the key distinction between productive and non-productive work in Classical Economic Theory?
- Which among the following conditions are true for Golden Rule of Accumulation of Edmund Phelps for optimum capital accumulation ? Choose from the code below :
I. Savings rate is unique.
II. Marginal productivity of capital be equal to capital depreciation.
Codes : - Which of the following is the correct assumption for the Lewis two sector model ?
- Which of the following is a major indivisibility of Rosenstein-Rodan Model of development ?
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