Which of the following predicts that there can be no sustained rise in the real wage rate above the subsistence level?

Question

Quizplus · Accepted Answer

Classical growth theory, particularly the Malthusian model, predicts that any increase in wages above subsistence level will lead to an increase in population, which in turn will decrease the per capita resources and force wages back down to subsistence level. Therefore, there can be no sustained rise in the real wage rate above the subsistence level according to classical growth theory. The other two options, neoclassical growth theory and new growth theory, do not make this prediction.

Which of the Following Predicts That There Can Be No