Assume the Production Function in an Economy Is Y =

question 42

Multiple Choice

Assume the production function in an economy is Y = AK,where Y = output,A = productivity,and K = capital.This means that

• A)the economy can grow forever.
• B)the growth will come to an end because of diminishing marginal productivity.
• C)the neoclassical growth model prevails.
• D)the marginal product of capital depends on the size of capital stock.

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Definitions:

Compounded Semi-Annually

Interest that is computed and added to the principal twice a year, allowing the investment to grow more rapidly.

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth.

Deposits

Money placed into a financial institution for safekeeping, which may earn interest over time.

Investment Plan

A financial strategy designed to help individuals allocate their capital towards investment vehicles with the aim of generating future profits.