According to the neoclassical growth model, a one-time technological advance will
A)shift the investment requirement line up
B)increase the long-term growth rate of output
C)have no effect on the steady-state capital-labor ratio
D)lead to a decrease in the rate of depreciation
E)none of the above

Question

Quizplus · Accepted Answer

A one-time technological advance in the neoclassical growth model will temporarily boost the level of output and lead to a new, higher steady-state level of income per capita, but it does not change the long-term growth rate of output, which is determined by the exogenous rate of technological progress. It also does not inherently change the investment requirement line, the steady-state capital-labor ratio in the long term, or the rate of depreciation. These factors are influenced by other aspects of the economy and the model's assumptions, not directly by a one-time technological advance.

According to the Neoclassical Growth Model, a One-Time Technological Advance