Question

In the Solow growth model with population growth and labor-augmenting technological change, the break-even level of investment must cover:______
1. depreciating capital, capital for new workers, and capital for new effective workers.
2. depreciating capital and capital for new workers.
3. depreciating capital and capital for new effective workers.
4. depreciating capital.

Answer 1

Answer:

1. depreciating capital, capital for new workers, and capital for new effective workers.

Explanation:

break-even investment is the level of investment necessary to keep the capital-labor ratio constant.