Which of the following would NOT be an outcome or policy conclusion derived from the neoclassical growth theory ? A) Closed economies with lower savings rates - other things being equal - grow more rapidly in the short run than those with high savings rates and tend to converge to higher per capita income levels. B) Open economies experience income convergence at higher levels as capital flows from rich countries to poor countries where capital-labour ratios are lower and thus returns on investments are higher. C)Closed economies with lower savings rates - other things being equal - grow more slowly in the short run than those with high savings rates and tend to converge to lower per capita income levels. D) Openness leads to greater access to foreign production ideas that can raise the rate of technological progress and of growth. E) By impeding the inflow of foreign investment, the heavy-handedness of many developing countries governments retard growth across developing world.
Added by Joshua I.
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It suggests that economies with higher savings rates will accumulate more capital, leading to higher growth rates in the short run. However, diminishing returns to capital mean that these economies will eventually slow down and converge to a steady-state growth Show more…
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