In the Solow Model, Saving and Investing in Additional Factories

Multiple Choice

In the Solow model, saving and investing in additional factories and computers does ________ if the economy is below Y*. But, in the long run, the ________ accumulation lead the return to these investments to fall.

A) lead output to grow in the medium run; diminishing returns to capital
B) lead output to grow in the long run; increasing returns to capital
C) lead output to grow in the medium run; increasing returns to capital
D) not lead output to grow in the medium run; diminishing returns to capital
E) not lead output to grow in the long run; increasing returns to capital