In the endogenous growth model presented in the text,
A) consumption grows faster than human capital.
B) human capital grows faster than consumption.
C) both consumption and human capital grow at the same rate.
D) neither consumption nor human capital grows in the steady state.
C
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The division of labor and specialization explain
A) why the average product of labor falls when firms use more capital or change the layout of their businesses. B) why, when the marginal product of labor increases, so does the average product of labor. C) why the marginal product of labor rises as a firm hires its first units of labor. D) why firms may find it profitable to use more workers when the marginal product of labor is negative.
Assume a country is closed. Given this information, which of the following must occur?
A) demand for domestic goods will be less than the domestic demand for goods B) demand for domestic goods will be greater than the domestic demand for goods C) S + T = I + G D) a budget surplus exists E) S = I