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------------------------------------------------ The Solow model suggests that steady-state investment per worker is positively related to the capital-labor ratio. This occurs because:

Select one:
A. The higher the capital-labor ratio, the lower the capital depreciation rate.
B. The higher the capital-labor ratio, the greater the amount of resources available for capital investment.
C. The higher the capital-labor ratio, the more investment per worker is required to replace depreciating capital.
D. The higher the capital-labor ratio, the less the economy needs to equip new workers with the same high level of capital.

The Solow model suggests that steady-state investment per worker is positively related to the capital-labor ratio because the higher the capital-labor ratio, the more investment per worker is required to replace depreciating capital. Therefore, the correct option is C.

The reasoning behind this is that when the capital-labor ratio is high, there is more capital per worker in the economy. As a result, there is a larger amount of capital that is subject to depreciation, which is the wear and tear of capital over time.

To maintain the same capital-labor ratio and keep the economy in a steady-state, more investment per worker is needed to replace the depreciating capital. This is why a higher capital-labor ratio results in a higher steady-state investment per worker.

Hence, the answer to reason Solow model suggests that steady-state investment per worker is positively related to the capital—labor ratio is option C: the higher the capital—labor ratio, the more investment per worker is required to replace depreciating capital.

Learn more about Solow model:

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