The "Nonconvergence" Problem with the Solow Growth Model Is That

question 79

Multiple Choice

The "nonconvergence" problem with the Solow growth model is that

• A)a higher return to capital in poor countries should essentially cause all nations to have roughly the same standard of living,yet they clearly do not.
• B)if a disturbance dislodges an economy from the steady-state point,it continues moving further from that point indefinitely.
• C)technological change is assumed to just "drop from the sky."
• D)a rise in the rate of national saving does not raise the growth rate of real GDP per person.

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Definitions:

Friedrich Engels

A 19th-century German philosopher, social scientist, and collaborator with Karl Marx in the development of Marxist theory.

Inequalities of Wealth

Disparities in the distribution of assets and wealth across individuals or groups within a society.

Contractually Bound

Obligated by a contract to act in accordance with its terms.

Kinship Network

A web of social relationships that form an important part of the social structure in many societies, emphasizing blood ties and marital connections.