Figure 8.3: The Solow Diagram Dynamics of the Solow Model If the economy's capital per worker is less than the steady state capital per worker (i.e., k, < k*), investment (it) is greater than depreciation (Ski), which means that capital per worker increases toward its steady state level (i.e., Akt > 0). If the economy's capital per worker is greater than the steady state capital per worker (i.e., k > k*), investment (it) is less than depreciation (okt), which means that capital per worker declines toward its steady state level (i.e., Akt < 0). If the economy's capital per worker is equal to the steady state capital per worker (i.e., k, = k*), investment (it) is equal to (oki), which means that capital per work does not change (i.e., Akt = 0). We can also determine the steady state income per worker, y*, and steady state consumption per worker, c*. Using the per-worker production function in Equation (8.2) and the steady state capital per- worker, steady state income per worker is given by, y* = Ak *. To calculate consumption per 115