The application of Solow's growth theory to the explanation of the slowdown in productivity growth in the United States suggests that the slowdown is primarily caused by
A)reduced growth in the capital stock per hour of work.
B)reduced growth in the technical change or total factor productivity.
C)slow residual growth of the capital stock.
D)ignorance since people save and invest less.

Question

Quizplus · Accepted Answer

Solow's growth theory suggests that productivity growth is driven by increases in both capital stock and total factor productivity. Therefore, the slowdown in productivity growth in the United States can be explained by a reduced growth in technical change or total factor productivity.

The Application of Solow's Growth Theory to the Explanation of the Slowdown