Implications of the Solow Growth Model on Economic Growth

Hard Economic Growth And Development Growth Theories

In the context of the Solow Growth Model, various factors contribute to the long-term economic growth of nations. This model emphasizes the role of capital accumulation, labor force growth, and technological advancement in driving productivity. However, an essential aspect of this model is how diminishing returns to capital affect growth.

Which of the following statements most accurately reflects the implications of the Solow Growth Model regarding the sources of economic growth?

Economic growth can be sustained indefinitely through capital accumulation alone, as long as savings rates are high.

Once the economy reaches its steady state, growth in output per worker is driven primarily by technological progress rather than capital accumulation.

In the Solow model, sustained growth of GDP per capita can escape the diminishing returns to capital through population growth.

Hint

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