Which of the following is a characteristic of the 'Endogenous Growth Theory'?
A. Only population growth determines per capita income growth
B. Diminishing returns to capital always limit growth
C. Long-run growth is determined by factors within the model such as human capital and R&D
D. Technological progress is exogenous
Answer: Option C
Solution (By JKSSB Mock Tests)
Endogenous growth theory treats technological progress and human capital accumulation as outcomes of economic decisions within the model, allowing sustained long-run growth in per capita income.
Explanation:
Returns to scale examine how output changes when all inputs are increased by the same proportion. They can be increasing, constant or decreasing.
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