In the Solow growth model the steady state is when the economy has:
A)full employment.
B)the optimal capital labour ratio, k*.
C)zero inflation.
D)all of the above.

Question

Quizplus · Accepted Answer

In the Solow growth model, steady state is achieved when the economy has the optimal capital-labor ratio, k*. This is the point at which capital per worker is neither increasing nor decreasing, and output per worker is also stable. Full employment and zero inflation may or may not accompany the steady state, but they are not the defining criteria for it.

In the Solow Growth Model the Steady State Is When