-In the above figure, suppose the economy is initially on LD 0 and LS 0 . As a result of an increase in technology, classical growth theory predicts

Classical growth theory suggests that technological advancements lead to increased productivity, which can support a larger population, thus resulting in population growth.

-In the above figure, suppose the economy is initially on LD 0 and LS 0 . As a result of an increase in technology, classical growth theory predicts

Classical growth theory suggests that technological advancements lead to increased productivity, which can support a larger population, thus resulting in population growth.

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-In the Above Figure, Suppose the Economy Is Initially on LD₀

Question 309

Multiple Choice

-In the above figure, suppose the economy is initially on LD₀and LS₀. As a result of an increase in technology, classical growth theory predicts

A) the real wage rate will first fall, then rise.
B) there will be an increase in population.
C) the subsistence real wage rate will rise.
D) the subsistence real wage rate will fall.

Correct Answer: