In the basic Solow model, growth occurs only as a result of factor accumulation. There are two factors, labour and capital. 1.What does Solow model predict about output. During the transition output as well as capital grows, both at a diminishing rate. In this video I introduce the Solow growth model and show how to solve for the steady state. The economy of NYC can be analyzed using the Solow model. The steady state is the key to understanding the solo model. At the steady state investment is equal to depreciation. Output and capital per worker grow at the same constant, positive rate in BGP of model. In long run model reaches BGP. 2.