In the solow growth model, increases in capital increase output and the increase amount of output used to replace depreciating capital.
Option A is correct .
The Solow – Growth model or exogenous growth model is an profitable model of long- run profitable growth. It attempts to clarify long- run profitable growth by looking at capital collection, labor or population growth, and increases in productivity largely driven by technological progress. Solow growth model is a long- term model of profitable growth by looking at three main factors, videlicet capital collection, labor growth, and multifactor productivity. For the ultimate, economists relate to technological process, which affects the other two variables, labor, and capital.
The increase in productivity means that at every position of capital per worker, workers produce further affair. This also means that at a given rate of saving, further is invested. So there's an original increase in affair and investment due to the change in productivity.
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