Classical Growth Theory Argues That When Real GDP Per Person

question 28

Multiple Choice

Classical growth theory argues that when real GDP per person rises above the subsistence level

• A) technological change slows down, stagnating the economy.
• B) population growth increases, driving real GDP per person back to subsistence level.
• C) people don't want to work as much, decreasing labor supply.
• D) the economy enjoys a period of permanent growth.

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Definitions:

Confirmation Error

A cognitive bias involving the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Representativeness Bias

A cognitive bias where individuals make judgments about the probability of an event based on how much it resembles their existing stereotypes.

Escalating Commitment

The phenomenon where people increase their investment or involvement in a decision or action despite facing negative feedback or outcomes.

Confirmation Error

A cognitive bias that involves focusing on information or evidence that confirms pre-existing beliefs or hypotheses, while ignoring contradictory data.