Case Interview Prep

Answer: B - Interest rates are not included in the calculations of economic growth according to the Solow-Swan model.

Key Takeaway: The Solow-Swan growth model is a neo-classical economic growth model. The model postulates that increasing capital relative to labor leads to economic growth since workers will become more productive. In other words, the output per worker will be higher if capital is increased per worker. The model predicts that increasing capital will raise the standard of living for people in the short term and temporarily.