High School

According to the Solow model, an increase in the capital-labor ratio will:

A. always increase steady state consumption per worker.
B. reduce steady state consumption per worker if the capital-labor ratio is below the Golden Rule capital stock.
C. always reduce steady state consumption per worker.
D. increase steady state consumption per worker if the capital-labor ratio is below the Golden Rule capital stock.

Answer :

An increase in the capital-labor ratio will:
d. increase steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock.


In the Solow model, when the capital-labor ratio is below the Golden rule capital stock, increasing the capital-labor ratio will lead to higher steady state consumption per worker.

This is because more capital per worker allows for increased production and consumption in the economy. However, if the capital-labor ratio is already at or above the Golden rule capital stock, further increases will not lead to higher steady state consumption per worker.

For more information on steady state consumption refer https://brainly.com/question/30905333

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