CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

The main criticism of the neoclassical model is that:

A. It is a theory of growth that leaves the main factor in economic growth unexplained.
B. The law of diminishing returns of capital does not hold in reality.
C. Convergence is not supported in reality.
Correct Answer: A

Neoclassical growth theory has explained growth by showing how growth cannot be explained by neoclassical growth theory. The unknown, "residual" element has never been satisfactorily specified, and the main conclusion of the theory itself is that technology creates growth. This, in itself, would indicate that an understanding of technological change would be the appropriate focus of economic research.

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