How Will Technological Advancement Impact the Steady State Level of Capital

question 153

Multiple Choice

How will technological advancement impact the steady state level of capital in the Solow growth model?

• A) It will have no effect.
• B) It will increase the steady state level of capital.
• C) It will decrease the steady state level of capital.
• D) It will increase the steady state level of capital in the short run but not the long run.
• E) It will increase the steady state level of capital in the long run but decrease the steady state level in the short run.

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Definitions:

Systemic Risk

The risk of collapse of an entire financial system or entire market, due to the failure of a single entity or group.

Financial Crisis

A situation where the value of financial institutions or assets drops rapidly, leading to a loss of confidence, insolvencies, and liquidity shortages.

Collateralized Debt Obligations

A type of structured asset-backed security (ABS) with multiple layers of debt obligations typically secured by a pool of loans or other assets.

Promissory Note

A financial instrument comprising a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.