A problem with the constant average product of capital growth model is that:
A)a common view among economist is that the average product of capital eventually starts to fall as capital rises.
B)output per worker grows in the long run.
C)the Y/K ratio grows.
D)all of the above.

Question

Quizplus · Accepted Answer

The constant average product of capital growth model assumes that the average product of capital remains constant as capital rises, but in reality, many economists believe that the average product of capital eventually starts to fall as capital rises. Therefore, this assumption is not accurate, and the model may not accurately predict long-term growth. Options B and C are not directly related to the problem with the model, so they are not the best choices.

A Problem with the Constant Average Product of Capital Growth