Question

According to the Solow growth model, high population growth rates:_________ a) are a prerequisite for technological advances and higher living standards. b) force the capital stock to be spread thinly, thereby reducing living standards. c) place great strains on an economy's productive resources, resulting in perpetual poverty. d) are not a factor in determining living standards."

Answer 1

Answer:

b) force the capital stock to be spread thinly, thereby reducing living standards.

Explanation:

Solow growth model: It is a model of economic growth, which was developed by Nobel laureate Robert Solow. It helps in analyzing the change in the output of production due to a change in population growth rate, saving rate and technological growth rate.

In the Solow growth model, an increase in population growth rates will increase the growth rate of the total output of production, however, there are no sharp changes in the growth rate of per capita output and decrease in capital intensity and saving rate, which reduce living standard.