One of the Predictions of the Classical Growth Model Is

question 58

Essay

One of the predictions of the Classical growth model is that the long-run growth in per capita output disappears due to diminishing marginal productivity of labor and capital.Real world experiences suggest otherwise.Explain why.

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Definitions:

Selling Receivables

The process of selling a company's outstanding invoices to a third party to improve cash flow and reduce risk.

Risk

The possibility of experiencing loss or other adverse effects in business or investment.

Allowance Method

An accounting technique to estimate and record bad debts by recognizing a provision for accounts receivable that might not be collected.

Bad Debt Expense

An expense recorded by businesses to reflect irrecoverable amounts owed by customers, considered an unavoidable cost of extending credit.