Refer to the Solow Growth Model (discussed in class) to determine which of the following statements is CORRECT:O When investment per worker is less than the annual depreciation rate of the capital stock, output per worker and capital per worker (or capital-labor ratio) increases until the economy reaches the “steady state” levels of output per worker and capital per worker. O When investment per worker is greater than the annual depreciation of the capital stock, output per worker and capital per worker (or the capital-labor ratio) increase until the economy reaches the “steady state” output per worker and capital per worker levels. O Capital per worker and labor per worker increase as the economy enters a recession and decrease during economic expansions due to the elasticity of input substitution. O Capital per worker and labor per worker decrease since the income effect is greater than the substitution effect.
