Each of the Following Statements Is True Except

question 41

Multiple Choice

Each of the following statements is true except

• A) balanced growth occurs when the labor force, capital stock, and real output all grow at the same rate.
• B) along a balanced growth path, the ratio of capital to output is greater than the ratio of the saving rate to the labor force growth rate.
• C) Solow showed that the balanced growth path is stable: If the economy is off a balanced growth path, it will naturally tend to return to that path.
• D) a higher saving rate raises GDP, in Solow's analysis of the long-run growth model, but does not permanently raise the growth rate.
• E) a higher population growth rate lowers GDP per capita, in the Solow growth model, but does not permanently lower the growth rate.

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Definitions:

Horizontal

Describing a direction or plane that runs parallel to the ground or baseline in a coordinate system, often used to represent stability or equality.

Vertical

Relating to or denoting a direction or plane that is perpendicular to the horizon or to a base line, often used in various fields to describe orientation.

Outlier

An observation in data that is significantly distant from the rest of the observations, often indicating a measurement or entry error, or a novel or extreme value.

Positively Associated

A relationship between two variables where they move in the same direction, implying that as one variable increases, the other one also increases.