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According to Classical Growth Theory, If Labor Productivity Increases

Question 30

Multiple Choice

According to classical growth theory, if labor productivity increases,


A) the population grows but more slowly than real GDP so that people's incomes are permanently higher.
B) people save more, which increases the capital per hour even more, and so economic growth continues indefinitely.
C) the population grows and eventually real GDP returns to the subsistence level.
D) the pursuit of profit causes further increases in capital per hour and technology and economic growth continues indefinitely.
E) the growth rate of real GDP per person permanently increases.

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