Ten economies have all reached a steady state.According to the Solow growth model,which of the following is true?
A) They all have the same level of real gross domestic product (GDP).
B) They all have the same level of real GDP per capita.
C) They are all growing at the same positive rate.
D) Investment in each of these economies is equal to zero.
E) They all have the same rate of depreciation.

Question

Quizplus · Accepted Answer

In the steady state of the Solow growth model, the economy has reached a point where capital per worker and output per worker are constant. Therefore, all ten economies in the steady state will have the same level of real GDP per capita, but not necessarily the same level of real GDP (as this will depend on population size). The rate of growth, investment, and depreciation may vary across these economies.

Ten Economies Have All Reached a Steady State