Question

Some countries experiencing low birthrates are offering women incentives to have​ children, such as income subsidies and other benefits. Does the analysis in this section suggest that a decline in the birthrate is bad for the standard of​ living?

Answer 1

Answer: When considering individual standards of​ living, the Solow model make suggestions which states that, up to a​ point, a decline in the birthrate is beneficial to the standard of living because it will cause the​ break-even investment line flatter which will increase the​ steady-state capital-labor ratio as well as per capita GDP.

Step-by-step explanation:

A break-even point refers to a point when investments yield a positive return and this is usually depicted graphically.

The steady state is a point in which output per worker, consumption per worker, and capital per worker are constant.