In the Simple Solow Growth Model, with Constant Technology and Constant

question 13

Multiple Choice

In the simple Solow growth model, with constant technology and constant returns to scale, GDP per capita can only increase if:

• A) capital increases at the same rate as labour increases.
• B) capital increases at a slower rate than labour.
• C) capital increases at a faster rate than labour.
• D) increasing marginal returns to capital exists.

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Definitions:

Statement of Cash Flows

The statement of cash flows is a financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Cash Collections

The process and amount of cash gathered from receivables or sales transactions over a certain period.

Long Term Assets

Assets that are expected to provide economic benefits to a company over a period longer than one year, like buildings and machinery.

Condensed Balance Sheets

Simplified financial statements presenting only the most essential information about a company's financial position.