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Basic Question 6 of 18
According to the neoclassical growth theory, if there is an increase in the savings rate, in the long run capital per capita will ______ (increase? decrease? remain the same?), output per capita will ______ (increase? decrease? remain the same?), and the economy's growth rate will ______ (increase? decrease? remain the same?).
User Contributed Comments 3
| User | Comment |
|---|---|
| dipz | output per capita will increase at a decreasing rate. |
| kodali | The economy still grows, but the rate at which it grows remails the same. Note the difference between growth and rate of growth. |
| quanttrader | more technological change required for further growth, due to diminishing marginal productivity of capital-- |
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Learning Outcome Statements
compare classical growth theory, neoclassical growth theory, and endogenous growth theory;
explain and evaluate convergence hypotheses;
describe the economic rationale for governments to provide incentives to private investment in technology and knowledge;
CFA® 2025 Level II Curriculum, Volume 1, Module 9.