During the transition to the steady state in the Solow growth model:
A)the output per worker falls.
B)labour force participation rises.
C)the rate of growth of capital falls.
D)all of the above.

Question

Quizplus · Accepted Answer

During the transition to the steady state, the rate of growth of capital falls as investment is initially higher than depreciation but eventually becomes equal to it, resulting in a stable level of capital stock. Output per worker and labor force participation do not necessarily have a clear directional trend during the transition.

During the Transition to the Steady State in the Solow