Economics · Theories of Economic Growth
In Paul Romer's endogenous growth model, sustained long-run growth occurs primarily because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Returns to scale in the production of final goods are strictly constant
- 2Knowledge accumulation offsets the diminishing returns to physical capital accumulation✓
- 3Technological progress is treated as entirely exogenous to the economic system
- 4Labour productivity is completely independent of research and development (R&D)
Correct answer
Knowledge accumulation offsets the diminishing returns to physical capital accumulation
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