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The Reason That an Increase in α in the Production

Question 1

Multiple Choice

The reason that an increase in α in the production function y = Akα makes growth more responsive to investment is:


A) the higher the coefficient α, the more curved the production function becomes.
B) the higher the coefficient α, the lower the production function becomes.
C) the higher the coefficient α, the straighter is the related saving function.
D) the more curved is the related saving function, the more the steady state is affected by changes in the saving rate σ, population growth n, and depreciation δ.

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