In studying growth theory, we
A)assume that labor, capital, and raw materials are all used efficiently
B)assume that increased use of inputs cannot lead to a higher living standard
C)assume that technological advances cannot affect living standards
D)try to explain the reasons for recessions and booms
E)all of the above

Question

Quizplus · Accepted Answer

In growth theory, it is assumed that labor, capital, and raw materials are all used efficiently to explain economic growth. This is based on the idea of increasing productivity and output. B, C, and D are all incorrect as they go against the basic assumptions and objectives of growth theory.

In Studying Growth Theory, We