In the Solow model,the parameter
Denotes __________ and is __________.
A)investment;less than one
B)the depreciation rate;equal to zero
C)consumption;greater than one
D)the depreciation rate;less than one
E)investment;greater than one

Question

In the Solow model,the parameter 
Denotes __________ and is __________.
A)investment;less than one 
B)the depreciation rate;equal to zero 
C)consumption;greater than one 
D)the depreciation rate;less than one 
E)investment;greater than one

Quizplus · Accepted Answer

The parameter 11ea895d_4d49_fe9f_8397_5dcc5e08c2df_TB4305_11 in the Solow model denotes the depreciation rate, which is a fraction of capital stock that is lost every period. It is reasonable to assume that the depreciation rate is less than one, as we do not expect the capital stock to completely disappear in a single period. Option D is the only choice that reflects this understanding.

In the Solow Model,the Parameter