Which of the Following Is Consistent with Classical Growth Theory

question 340

Multiple Choice

Which of the following is consistent with classical growth theory?

• A) Real GDP per person will increase because technological change induces investment.
• B) Real GDP per person will never permanently increase.
• C) Competition destroys innovation and decreases profit.
• D) As real GDP increases, there will be a decrease in the rate of population growth.

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Definitions:

Retire

To retire means to withdraw from active working life, often due to reaching a certain age or financial independence that enables one to live without needing to earn a regular wage.

Cash Flow Stream

A cash flow stream is a series of cash flows associated with an investment over a period of time.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Future Value

The value of an asset at a specific date in the future, calculated from its present value using the expected rate of return.