In Neoclassical growth theory, increasing the amount of capital employed in production the average standard of living as long as the marginal product of capital exceeds zero.

Question

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According to Neoclassical growth theory, increasing the amount of capital employed in production raises the average standard of living as long as the marginal product of capital exceeds zero. This is because an increase in capital leads to an increase in output, which in turn increases income and the average standard of living. Therefore, option E, "unambiguously raises," is the best choice.

In Neoclassical Growth Theory, Increasing the Amount of Capital Employed