In the Solow model if capital per worker starts off at its steady state value:

a it subsequently...

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In the Solow model if capital per worker starts off at its steady state value:

a it subsequently grows forever
b it subsequently shrinks forever
c it remains at that steady state value forever
d its future evolution cannot be predicted

When capital per worker in the Solow model is below its steady state value:

a actual investment exceeds the investment needed to keep capital per worker constant
b actual investment is smaller than the investment needed to keep capital per worker constant
c actual investment is zero
d actual investment is equal to the investment needed to keep capital per worker constant

In the Solow model with a rate of capital depreciation equal to zero:

a capital per worker grows forever
b there is a steady state in which capital per worker is constant
c capital per worker shrinks forever
d capital per worker is indeterminate

Soma · Accepted Answer

#1.
d. D is the correct option. 
Solow model, in macroeconomic theory, is an exogenous growth model that predicts the change of capital per worker and output per worker as a result of the change in savings rate, population growth rate and the technological change.   At the steady state, there is no addition to capital stock, no economic growth.  Thus   it is very difficult to predict the future evolution if it starts capital per worker starts with steady state value.

In the Solow model if capital per worker starts off at its steady state value: a it subsequently grows forever b it subsequently shrinks forever c it remains at that steady state value forever d its...

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