In the Textbook Model of Endogenous Growth,long-Run Output Growth Would

question 5

Multiple Choice

In the textbook model of endogenous growth,long-run output growth would increase if there were either a ________ in the saving rate or a ________ in the depreciation rate.

• A)rise; rise
• B)rise; fall
• C)fall; rise
• D)fall; fall

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Definitions:

Income

The financial gain or money received by an individual or a business from various sources like work, investments, or transfers, during a specific period.

Consumption

The act of using goods and services for personal needs or to satisfy consumer desires.

45-Degree Line

A line in economics graphs that depict equilibrium points where the value of one variable equals the value of another; commonly used in Keynesian cross diagrams to show where aggregate expenditure equals aggregate output.

Saving

The portion of income not spent on current consumption, but rather set aside for future use or investment.