Question

In a ------------------------ economy there is no sustained per capita economic -------------------------- because population always increases following any one-time increase in output (food). *(Fill in the blanks)?

2- Why does steady technological growth allow economies to escape a Malthusian trap?

a- Because output can grow slower than population, leading to higher output per capita.

b- Because output can grow faster than population, leading to higher output per capita.

c- Because output can grow faster than prices, leading to deflation.

d- Because output can grow just as fast as population, leading to constant output per capita.

3- Solow showed that labor-augmenting technology leads to a positive growth rate for capital and output, even as labor time remains constant or declines slightly. (True or False)?

Answer 1

Consider the following analysis

Step-by-step explanation:

1) The fill in the blanks is taken from Malthusian trap theory. Which state that while food grows in arithmetic progression ,population grows in geometric progression. Implying population will always outnumber the food grown.

This theory applies in economy with high population.

so we can fill it with- underdeveloped, growth. Making the sentence ÷ in underdeveloped/developing economy there is no substantial per capita economic growth because population will always increase

2) option b is correct. As advancement in technology will increase the rate of output more than the population growth leading to increase in per capita output.

3) This statement is true because solow model states that labor augmenting technology enhances the productivity even if labour time remains constant or declines slightly. To understand this consider a hypothetical situation where to call people for interview secretary had to write letters to all the applicants but with introduction of telephone she can simply call the applicants , saving time. Now even if she works for the same time or even less, her productivity will still be more.