In the Solow growth model, sustained long-run growth requires technological progress.

• A. True
• B. False
• C. True only when technology progress occurs
• D. True only if population grows

Answer: (C)

In the Solow framework, capital accumulation alone hits diminishing returns, so the economy moves toward a steady state where per-capita growth stops. The only lasting source of sustained growth in living standards is technological progress, which raises the effectiveness of labor and shifts the production function upward. With ongoing technology progress, output per worker can grow each period; without it, per-capita growth eventually fizzles out (even if total output might rise with population). Population growth affects the level of total output but not the long-run growth rate of per-capita output on its own. That’s why sustained long-run growth is tied to technological progress, captured by the statement that it’s true only when technology progress occurs.