New SIDBI Grade A New Batch Starts on Nov 18

    Register

    Question

    According to the Solow Model, which factor is primarily responsible for sustained economic growth in the long run?

    A Increasing labor force Correct Answer Incorrect Answer
    B Increasing capital stock Correct Answer Incorrect Answer
    C Technological progress Correct Answer Incorrect Answer
    D Higher savings rate Correct Answer Incorrect Answer

    Solution

    In the Solow Model, sustained economic growth in the long run is primarily attributed to technological progress. While increases in the labour force and capital stock contribute to growth, but not in long run (Once we reach to new steady state) . Technological progress continuously shifts the production function upward, allowing for ongoing growth.  

    Practice Next