What are the basic arguments of the neoclassical growth theory?
What will be an ideal response?
The neoclassical growth theory explains economic growth as the result of technological change. Technological change leads to a level of saving and investment that makes capital per hour of labor grow. Growth, therefore, only ends if technological change ends. However the theory looks at technological change as being the result of chance and luck and so offers no explanation for how or why technological change occurs.
You might also like to view...
Which statement below is true for a price taker?
A) Marginal revenue can only be positive. B) Marginal revenue can only be negative. C) Marginal revenue can only zero. D) Marginal revenue can be positive, negative, or zero.
When financial intermediaries deleverage, firms cannot fund investment opportunities resulting in
A) a contraction of economic activity. B) an economic boom. C) an increased opportunity for growth. D) a call for government regulation.
The concept of economic rent would be more applicable to the earnings of
a. a secretary. b. Peyton Manning. c. a doctor or a lawyer. d. only a landowner.
Holding all else constant, higher prices will:
A. decrease the Lerner index. B. increase or decrease the Lerner index depending on the relative magnitude of the price increase. C. increase the Lerner index. D. have no impact on the Lerner index.