In a Neoclassical Growth Model, If the Capital-Labor Ratio Is

question 29

Multiple Choice

In a neoclassical growth model, if the capital-labor ratio is lower than the (optimal) steady-state level, we should expect that

• A)saving is smaller than the investment requirement
• B)output per capita will temporarily grow at a rate lower than population growth
• C)income per capita will decrease
• D)there will be a temporary increase in the capital stock that is greater than the increase in population
• E)all of the above

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Definitions:

Discounts

A reduction from the usual cost of something, often applied to prompt payment or for certain customers like students or seniors.

Long-Term Debt

Debt that is due for repayment after more than one year's time, often used for significant investments.

Source Of Cash

A source of cash refers to any activity or transaction that brings money into a business or individual's possession, increasing cash flow.

Purchasing Manager

A professional responsible for obtaining goods and services for business operations at the best possible price and quality.