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True of False(needs explanations and arguments to support your choice) The larger the share of capital...

True of False(needs explanations and arguments to support your choice)

The larger the share of capital in national income, the larger is the variation in steady state incomes that can be explained by differences in savings rates in the Solow model.

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Answer #1

- The larger the share of capital in national income, the larger is the variation in steady state incomes that can be explained by differences in savings rates in the Solow Model.
This statement is TRUE.
Because as per the SOLOW MODEL, the higher the saving and investment the higher the rate of growth of the national income and the national product.
The Solow Model analysis the higher saving and the investment which affects the long run economic growth in the long run.
There are some important points related to the Solow Model like- a higher the rate of saving rate does not affect permanently growth rate in the Solow model.
A higher rate of saving does result in the higher steady state higher level of output and capital stock.
An increase in the growth rate of population lowers the steady state level of per capita output

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