According to the neoclassical theory of distribution, in an economy described by a Cobb-Douglas production function, workers should experience high rates of real wage growth when:
A)real interest rates are high.
B)real interest rates are low.
C)labour productivity is growing rapidly.
D)capital's share of income is growing rapidly.

Question

Quizplus · Accepted Answer

In a Cobb-Douglas production function, real wages are linked to labor productivity. When labor productivity grows rapidly, it typically leads to higher real wages for workers.

According to the Neoclassical Theory of Distribution, in an Economy