The basic idea behind the convergence theory is:
A. also the basic idea behind the catch-up effect.
B. each additional unit of capital provides larger gains when you're coming from behind.
C. that countries starting at low levels of income will tend to grow at much faster rates than those starting with high levels of income.
D. All of these are true.
Answer: D
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A defining feature of new growth theory is that it involves economic models of growth which account for
A) political changes. B) capital flight. C) technological progress. D) population increases.
Refer to Figure 16-11. In the graph above, the shift from AD1 to AD2 represents the total change in aggregate demand. If government purchases increased by $50 billion, then the distance from point A to point B ________ $50 billion
A) would be greater than B) would be equal to C) would be less than D) may be greater than or less than