A key assumption in an endogenous growth model with both labor and capital inputs in the production function is that
A)the share of capital is larger than the share of labor
B)the share of capital and labor have to be equal
C)better technology is a byproduct of more capital investment
D)there are no external returns to capital
E)long-run growth comes solely from technological progress

Question

Quizplus · Accepted Answer

Endogenous growth models often assume that technological progress, which drives long-run economic growth, is a result of investment in capital. This means that as more capital is invested, better technologies are developed, enhancing productivity and growth.

A Key Assumption in an Endogenous Growth Model with Both