The Solow Growth Model Attempts to Explain

question 85

Multiple Choice

The Solow growth model attempts to explain:

• A) how consumption, saving, capital, labour and technology combine to determine long-term economic growth.
• B) how technology is endogenous to economic growth.
• C) how government spending, saving, capital, labour and technology combine to determine long-term economic growth.
• D) how capital and labour combine to determine short-term economic growth.

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Definitions:

Return on Assets (ROA)

A financial ratio that indicates how profitable a company is relative to its total assets, calculated as net income divided by total assets.

Return on Common Equity

A financial ratio indicating the amount of net income returned as a percentage of shareholders equity, measuring a company's profitability in generating profits from its equity financing.

Long-term Debt

Borrowings and financial obligations that are due for repayment beyond the period of one year.

Current Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its current assets by comparing its net sales to its current assets.