In the endogenous growth model with constant marginal product of capital,
A) output in poor nations may not grow faster than output in rich nations
B) labor grows more rapidly than output
C) increasing investment has no effect on the economy's growth rate
D) a steady state occurs at less than full employment
E) the capacity utilization rate equals the rate of depreciation

Question

Quizplus · Accepted Answer

In the endogenous growth model with constant marginal product of capital, output can continue to grow without diminishing returns to capital accumulation. Therefore, poor nations can catch up to and even surpass rich nations' output.

In the Endogenous Growth Model with Constant Marginal Product of Capital