In the Solow Growth Model, If Labour Input, L(0), Increases

question 34

Multiple Choice

In the Solow growth model, if labour input, L(0) , increases, then in the steady state:

• A)output per worker grows faster.
• B)capital per worker grows at the same rate, zero.
• C)capital per worker grows faster.
• D)all of the above.

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Definitions:

Retained Earnings

The portion of a company's profits kept in the business after dividends are paid to shareholders, used for reinvestment or to pay off debt.

Non-controlling Interest

An ownership interest in a corporation where the percentage of shares owned does not give the shareholder the control of the company.

Debit Entry

An accounting entry that increases an asset or expense account, or decreases a liability or equity account.

Full Goodwill Method

An accounting approach where goodwill is calculated as the difference between the purchase price of a subsidiary and the fair value of its identifiable net assets, including both the minority and majority interest.