In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by _____, and the growth in the stock of knowledge is determined by _____.
A) the fraction of labor in universities; the saving rate
B) the efficiency of labor; the saving rate
C) the production function; the efficiency of labor
D) the saving rate; the fraction of labor in universities

Question

Quizplus · Accepted Answer

In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by the saving rate, as savings influence investment in physical capital. The growth in the stock of knowledge is determined by the fraction of labor in universities, as this reflects the investment in human capital and research, driving knowledge growth.

In the Two-Sector Endogenous Growth Model, the Steady-State Stock of Physical