Answer :
Final answer:
A. Output per effective worker, capital per effective worker, real wage will grow at the same rate in the steady state in the Solow growth model with population growth and technological progress.
Explanation:
The Solow growth model is a neoclassical model of economic growth that focuses on the accumulation of capital and productivity. The model assumes that there are three key factors of production: labor, capital, and technology.
The balanced growth property predicts that in the steady state, output per effective worker, capital per effective worker, and real wage will grow at the same rate. This means that as the economy approaches the steady state, capital and output will both increase, but at a decreasing rate, while the real wage will continue to increase.
In other words, the growth rate of the economy will eventually stabilize, and the three variables will all grow at the same rate. This prediction assumes that there is no technological progress or population growth, and that the economy is operating under perfect competition.
However, in the presence of population growth and technological progress, the balanced growth property still holds true, but the steady state values of the variables are affected by these factors.
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