Question

In the Solow model, in the absence of any shock, the capital stock remains at some level forever. This rest point is called the Group of answer choices Steady state Saving rate Short-run equilibrium Rate of capital accumulation

Answer 1

Answer:

Steady state

Explanation:

This rest point is called the steady state. At this state investment is equal to depreciation. In solow growth model, an economy in steady state is of a stable size or fluctuates just a little.

Output, population, capital stock, saving, investment, and technical progress, all grow at a constant rate or are constant. An economy gets to a steady state after a period of growth or after a downsizing period.