Answer :
In the Solow model, a higher saving rate increases the steady-state levels of production and capital per worker but doesn't affect the real wage. A higher population growth rate reduces both production and capital per worker and the real wage. Improved technology enhances production per worker and the real wage, with no change in the amount of capital per worker.
The Solow diagram is a dynamic representation of economic variables in a Solow model. Three main aspects, the saving rate, population growth rate, and technology, significantly affect the steady-state levels of production per worker (Y/L), capital per worker (K/L), and the real wage (W/P).
A) An increased saving rate raises the steady-state levels of Y/L and K/L but doesn't change the real wage in the Solow model. The reason is, higher savings mean more resources are available to transform into capital, leading to an increase in production.
B) A higher population growth rate implies more workers but the same stock of capital. This dilutes the capital and reduces both Y/L and K/L in the long run, leading to a fall in the real wage.
C) Better technology can be viewed as an increase in productivity. It results in a higher steady-state level of Y/L and W/P, but doesn't change K/L. This is because technological improvements increase production efficiency, allowing more output and wages for the given amount of capital.
Learn more about Solow model here:
https://brainly.com/question/33066582
#SPJ1
