Key Implications of the Solow-Swan Growth Model

Medium Economic Growth And Development Growth Theories

In the context of long-term economic growth, various growth theories have been proposed to explain how economies expand and what factors contribute to this growth. One of the prominent theories is the Solow-Swan growth model. According to this model, the steady-state level of output per worker in an economy is determined by the rates of savings, population growth, and technological advancement.

Which of the following statements best summarizes a key implication of the Solow-Swan growth model?

In the long run, economies with higher savings rates will necessarily achieve higher levels of output per worker regardless of technological progress.

An economy can experience perpetual growth in output per worker without continuous technological improvements.

Increased rates of technological advancement can lead to higher steady-state levels of output per worker.

Hint

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