Economics · Economic Growth and Development
According to the Solow growth model, an economy will ultimately converge to a steady-state growth path from any initial condition primarily because:
- 1There are diminishing marginal returns to capital.✓
- 2It is assumed to be a single-sector economy.
- 3The population growth rate remains completely constant.
- 4There are constant returns to scale in production.
Correct answer
There are diminishing marginal returns to capital.
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