List the three main sources of long-run economic growth in the Solow framework.

• A. Government spending, foreign investment, and inflation
• B. Population growth, technology shocks, and currency depreciation
• C. Capital accumulation (savings), population growth, and technological progress (productivity)
• D. Natural resources, energy shocks, and infrastructure

Answer: (C)

In the Solow framework, sustained long-run growth comes from capital accumulation, population growth, and technological progress. Capital accumulation builds up the capital stock through saving and investment, lifting output but facing diminishing returns, so growth slows unless new investment keeps proceeding. Population growth enlarges the labor force, affecting how much capital per worker is available and thus the steady-state level of output per worker. Technological progress—shifts in the production function that raise productivity for any given inputs—drives ongoing growth in output per worker on a balanced growth path, since it lifts the efficiency of both labor and capital. The other options mix effects that don’t generate persistent long-run growth in the Solow model: inflation, government spending, and currency movements don’t represent the core long-run growth channels; and factors like natural resources or energy shocks and infrastructure can influence short- to medium-run dynamics but aren’t the primary, endogenous sources of sustained long-run growth in this framework.