Economics · Neoclassical Growth Theory
According to the Solow neoclassical growth model, what is the primary mechanism that enables a capital-scarce economy to grow faster than a capital-abundant economy?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Lower population growth rates in developing countries that boost per-capita GDP growth
- 2Diminishing marginal returns to capital, making each additional unit of capital more productive in capital-scarce economies✓
- 3Greater availability of foreign direct investment in poorer nations
- 4Higher baseline technological progress in developing nations
Correct answer
Diminishing marginal returns to capital, making each additional unit of capital more productive in capital-scarce economies
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Neoclassical Growth Theory MCQs →Want more practice questions on Neoclassical Growth Theory?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Neoclassical Growth Theory