Differences in factor accumulation and/or differences in production efficiency must account for all international differences in:
A) human capital and physical capital.
B) saving rates and population growth rate.
C) income per person.
D) labor efficiency.

Question

Quizplus · Accepted Answer

According to the Solow-Swan model, differences in income per person across countries are explained by differences in factor accumulation (human and physical capital) and differences in production efficiency. Therefore, the only correct statement is that all international differences in income per person can be explained by differences in factor accumulation and/or production efficiency. The other options (A, B, and D) may contribute to these differences, but they do not account for all of them.

Differences in Factor Accumulation And/or Differences in Production Efficiency Must