The neoclassical theory of growth identifier the steady state rate of growth as the ____ just sufficient to keep _____ constant while labor grows?
Correct answer: D. investment capital per person
- A. saving, investment
- B. capital per person, productivity
- C. labor growth, output
- D. investment capital per person
Explanation
In the neoclassical growth model, steady-state investment is just enough to equip the growing labour force while keeping capital per person constant. Thus the relevant pair is investment and capital per person.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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