Answer :
The Solow model with population growth and technological progress predicts that there is a steady state for the economy in the long run. In this steady state, the economy has a constant output per worker and capital per effective worker. The steady state is achieved when the saving rate, population growth rate, and technological progress rate are all balanced.
In terms of the three options given, the steady state is defined in terms of capital per effective worker, which is the amount of capital that each worker has available to use to produce output. Capital per worker does not factor in the changes in productivity that result from technological progress, whereas capital per effective worker does. By measuring the amount of capital that each worker has access to, we can see how productive the economy is and how much output can be produced per worker.
Technological progress is a key factor in determining the steady state of the economy. As technological progress improves, the amount of capital per effective worker increases, which in turn leads to higher output per worker. This increased productivity means that the economy can sustain a higher level of output without experiencing inflationary pressure.
In summary, the Solow model with population growth and technological progress predicts a steady state for the economy in the long run. This steady state is achieved when the saving rate, population growth rate, and technological progress rate are all balanced. The steady state is defined in terms of capital per effective worker, which reflects the impact of technological progress on productivity.
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