In the textbook model of endogenous growth,long-run output growth would decline if there were either a ________ in the saving rate or a ________ in the depreciation rate.
A)rise; rise
B)rise; fall
C)fall; rise
D)fall; fall

Question

Quizplus · Accepted Answer

In the textbook model of endogenous growth, long-run output growth is directly related to the saving rate and inversely related to the depreciation rate. Therefore, a fall in the saving rate or a rise in the depreciation rate would lead to a decline in long-run output growth. Option C is the only one that matches this relationship.

In the Textbook Model of Endogenous Growth,long-Run Output Growth Would