The Neoclassical Model of Economic Growth Suggests That

question 55

Multiple Choice

The neoclassical model of economic growth suggests that:

• A) growth rates between rich and poor countries will converge.
• B) rich countries will get richer and poor countries will get poorer.
• C) in equilibrium, the quantity of capital will be greater than the quantity of labour.
• D) higher savings will lead to economic growth in the long run.

---

Definitions:

Irrational Consumers

Refers to the idea that consumers often make decisions that deviate from the assumptions of rationality in economics, such as making impulsive or emotionally driven purchases.

Market Power

The ability of a company or entity to influence the price and production levels in a market.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs.

Demand Curve

A diagram displaying how the cost of a product is connected to the consumer demand for it.