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:

Permanent/Temporary

Refers to the classification of accounts based on their longevity; permanent accounts are not closed at the end of the accounting period, while temporary accounts are.

Net Sales

Total sales revenue less returns, allowances, and discounts.

Percentage Increase

A measure of the degree to which a quantity has grown compared to its previous value, expressed as a percentage.