Question

Assume that two economies are identical in every way except that one has a higher saving rate. According to the Solow growth model, in the steady state the country with the higher saving rate will have ______ level of output per person and ______ rate of growth of output per worker compared to the country with the lower saving rate.

Answer 1

Lower; the same

Step-by-step explanation:

The Solow growth model was developed by Robert Solow.

The Solow Growth Model describes or analyses economic growth based on labor growth, increase in productivity and capital accumulation that occur at a long run, that is over a period of time.

In this case, the country with the higher saving rates[ capital accumulation], will definitely have a lower level of output per person, and the same growth rate with the other country over a long period of time as explained by the Solow growth model.