An Assumption of the Neoclassical Theory of Growth Is That

question 48

Multiple Choice

An assumption of the neoclassical theory of growth is that

• A) people receive only subsistence real GDP per person.
• B) all technological advances are the result of chance.
• C) the marginal product of all types of capital increases as more capital is accumulated.
• D) knowledge has diminishing returns.

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Definitions:

Straight-line Rate

A method of calculating depreciation by evenly allocating the cost of an asset over its useful life.

Double Declining-balance

An accelerated method of depreciation where the book value of an asset is reduced at double the rate of its straight-line depreciation.

Net Income

The amount of profit remaining after all expenses, taxes, and costs have been subtracted from total revenues.