The most plausible way to produce a continuous increase in the standard of living within the Solow growth model is to assume
A)continuous technological improvement.
B)a positive rate of population growth.
C)a zero rate of depreciation.
D)continuous increases in the national saving rate.
E)continuous growth in the capital stock.

Question

Quizplus · Accepted Answer

Within the Solow growth model, an increase in the standard of living depends on increasing the productivity of the economy, which is driven by advances in technology. Therefore, continuous technological improvement, as described in choice A, is the most plausible way to produce a continuous increase in the standard of living. Other factors, such as population growth (choice B), depreciation (choice C), national saving rate (choice D), and capital stock (choice E), could also contribute to growth, but only if they enable or support technological progress.

The Most Plausible Way to Produce a Continuous Increase in the Standard