The Key Difference Between the Neoclassical Growth Theory and the Classical

question 13

Multiple Choice

The key difference between the neoclassical growth theory and the classical growth theory is that

• A)capital is not subject to diminishing returns under classical growth theory.
• B)capital is subject to diminishing returns under classical growth theory.
• C)increases in population drive workers' incomes back down to the subsistence level in classical growth theory.
• D)growth in the neoclassical growth theory ends with a population explosion.
• E)in classical growth theory, the pace of technological change influences the economic growth rate but economic growth does not influence the pace of technological change.

---

Definitions:

Capital Account

Part of a country's balance of payments, it records the net change in ownership of national assets.

Interest

The cost of borrowing money or the return on investment for savings and loans, expressed as a percentage.

Revaluation

The process of adjusting the book value of a fixed asset or foreign currency to reflect its current market value.

Assets

Assets held or managed by a company anticipated to yield future financial gains.