1) Growth theory uses the aggregate production function (APF) to relate potential national income (long-run national income) to aggregate inputs: Y * = GDP = F(K, L, H) a What is does diminishing...

1) Growth theory uses the aggregate production function (APF) to relate potential national income (long-run national income) to aggregate inputs: Y^*
= GDP = F(K, L, H)

a What is does diminishing marginal product of capital mean?

b Explain why diminishing marginal product of capital may not hold, and instead we could increasing marginal product of capital

c Does growth in labor always result in increases in the standard of living measured as national income per worker? Briefly explain

d Choose any theory of economic growth and briefly explain how it works