Classical Growth Theory Asserts That

question 31

Multiple Choice

Classical growth theory asserts that

• A) growth in real GDP per person is temporary.
• B) only some countries can have economic growth.
• C) real GDP growth will eventually be a constant 3 percent per year.
• D) nominal GDP growth is most important.

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Definitions:

Team Production

A production process in which employees work together under the supervision of the owner or the owner’s representative.

Contracting Out

The practice of hiring external organizations or individuals to perform services or create goods that were previously done in-house.

Principal Agent Problem

A dilemma in economics and organizational theory where one party (the agent) is supposed to act in the best interest of another party (the principal) but might act in their own interest instead.

Shirking

Working at less than the expected rate of productivity, which reduces output. Shirking is more likely when workers are not monitored, so that the cost of lower output falls on others.