Question

Which of the following statements hold true when steady state is attained in the Solow Model?
(A) Capital-Labour ratio does not change
(B) Depreciation does not change
(C) Income per capita does not change
(D) Inequality does not change
Choose the correct answer from the options given below:

• (A) only
• (A) and (B) only
• (A) and (C) only
• (A) and (D) only

Answer 1

The Correct Option is C

At steady state in the Solow model:

(A) The capital-labor ratio stabilizes.

(C) Income per capita is constant.

Thus, the correct answer is (c).