In the Endogenous Growth Model with Constant Marginal Product of Capital

question 22

Multiple Choice

In the endogenous growth model with constant marginal product of capital,

• A) output in poor nations may not grow faster than output in rich nations
• B) labor grows more rapidly than output
• C) increasing investment has no effect on the economy's growth rate
• D) a steady state occurs at less than full employment
• E) the capacity utilization rate equals the rate of depreciation

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Definitions:

Demand

It represents the quantity of a good or service that consumers are willing and able to purchase at various prices.

Supply

The total amount of a product or service that is available to consumers.

Elastic

Describes a situation where the demand for a good or service significantly changes in response to a change in price.

Optimal Tax

A taxation principle aiming to maximize economic efficiency without imposing undue burdens or distortions.