According to the Solow model, an increase in the fraction of output that is saved will increase ________ in the long run.
A) investment.
B) output.
C) per capita GDP.
D) All of the answers are correct.

Question

Quizplus · Accepted Answer

According to the Solow model, an increase in the fraction of output that is saved will lead to a higher level of investment. The increased investment will lead to more capital accumulation, which in turn will increase output and per capita GDP in the long run. Therefore, all of the answers (investment, output, and per capita GDP) are correct.

According to the Solow Model, an Increase in the Fraction