The Solow Model Demonstrates That

question 3

Multiple Choice

The Solow model demonstrates that

• A)in the absence of productivity growth, economic growth will turn negative in the long run.
• B)in the absence of productivity growth, economic growth will reach a steady state of zero per-capita growth in the long run.
• C)productivity growth must exceed the rate of growth in the population to avoid a steady state in the long run.
• D)productivity growth will inevitably decline due to diminishing marginal productivity.

---

Definitions:

Long-Term Assets

Assets that a company plans to hold for more than one fiscal year, such as buildings, land, and equipment.

Current Ratio

A financial ratio indicating a firm's capacity to settle short-term liabilities using its short-term assets.

Noncurrent Assets

Long-term assets not expected to be converted into cash within one year, such as property, plant, and equipment.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the owners' claim on the company's assets.