One of the Shortcomings of the Solow Model Is That

question 25

Multiple Choice

One of the shortcomings of the Solow model is that it

• A)treats technological change as freely available to all countries.
• B)does not treat technological change as freely available to all countries.
• C)treats technological change as an endogenous variable.
• D)treats technological change as the only source of economic growth.

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Definitions:

Keynesian Theory

Keynesian Theory is an economic theory stating that government intervention through fiscal and monetary policy is necessary to manage aggregate demand and address economic cycles.

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and monetary policies.

Expected Rate Of Profit

The anticipated return on an investment, taking into account the risk and time value of money.

Classical Theory

Refers to an economic theory that asserts that the economy is self-regulating, markets are best left alone without government intervention, and supply creates its own demand.