- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 9. Economic Growth
- Subject 3. Production Function and Growth Accounting
CFA Practice Question
The only way to sustain growth in potential GDP per capita is through:
B. capital deepening investment.
C. technological change.
A. population growth.
B. capital deepening investment.
C. technological change.
Correct Answer: C
This is because of diminishing returns to capital. The growth accounting equation also shows that improvements in technology are more important than capital in raising an economy's standard of living.
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