An increase in the saving rate in the Solow model (A) increases the growth rate of the economy permanently (B) increases the growth rate of the economy in the transition to the steady state but not in the steady state (C) reduces the growth rate because aggregate demand falls (D) none of the above.

DSE 2009 Question 57: Harrod–Domar and Solow growth models

An increase in the saving rate in the Solow model

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Harrod–Domar and Solow growth models has come up 113 times in 7 exams since 2006.

This question is on Comparative statics in the Solow model, part of Harrod–Domar and Solow growth models in Economics of Growth and Development.

How steady states change with population growth, technology and depreciation.

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