Answer :
Answer:
The statement that is not true about the steady state in the Solow model with population and technological progress is: "total capital stock and total output grow at the rate of population growth."
Explanation:
In the Solow model with population and technological progress, the following statements are accurate:
1. Capital per effective worker and output per effective worker are constant: In the steady state, the capital per effective worker (k) and output per effective worker (y) remain constant.
This is because the economy has reached a point where the depreciation of capital and the growth of both population and technology are balanced, allowing for a stable capital and output per effective worker ratio.
2. Capital per worker and output per worker grow at the rate of technological progress: Since the steady state in the Solow model includes technological progress, the capital per worker (K/L) and output per worker (Y/L) grow at the rate of technological progress (g).
This is because technology improves the productivity of workers and the efficiency of capital, leading to higher output per worker.
3. Saving per effective worker and consumption per effective worker are constant: In the steady state, both saving per effective worker (sY) and consumption per effective worker (cY) remain constant.
This is because the economy has reached a point where the balance between investment, saving, and consumption is maintained, allowing for a stable saving and consumption per effective worker ratio.
However, the total capital stock (K) and total output (Y) grow at the rate of population growth (n) plus the rate of technological progress (g), not just the rate of population growth.
This is because, in the steady state, both population and technology grow simultaneously, affecting the growth of total capital stock and total output. Therefore, the correct statement should be: "total capital stock and total output grow at the rate of population growth plus the rate of technological progress."
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