In the Solow growth model, the assumption of constant returns to scale means that:

A. All economies have the same amount of capital per worker.

B. The steady-state level of output is constant regardless of the number of workers.

C. The savings rate equals the constant rate of depreciation.

D. The number of workers in an economy does not affect the relationship between output per worker and capital per worker.

In the Solow growth model, the assumption of constant returns to scale means that: choice 3 of 4: the savings rate equals the constant rate of depreciation.

This assumption implies that the rate at which an economy can produce goods and services is determined by its stock of capital, and that the return on investment in capital is constant. In other words, the productivity of an economy is not affected by the amount of capital per worker, but rather by the total amount of capital available.

This means that the steady-state level of output is determined by the total stock of capital, rather than the amount of capital per worker. Therefore, the savings rate is equal to the rate at which capital is being depreciated, and must be equal to the rate at which new capital is being invested in order to maintain the steady-state level of output.

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