to write the production function in the form below, according to the textbook, w

Question

to write the production function in the form below, according to the textbook, what two key assumptions must we make? O A. Employment is constant and there is no private saving O B. Employment increases at a decreasing rate and there is no private saving O C. There is ever expanding technological progress and unemployment is constant O D. Employment is constant and there is no technological progress in the economy. In order to write the relationship between investment and output in the form below, what key assumptions must we make? Click to select your answer

Explanation / Answer

Answer 1:

Option D. While writing the production function, it is assumed that Employment is constant and there is no technological progress in the economy. This leads to a stable production function.

Answer 2:

We assume that public savings are zero and private savings is proportional to income and this ratio is constant.

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