From A Neoclassical Perspective, Which Of The Following Would Most Likely Be Viewed As An Element That Underpins Long-run Productivity Growth

From a neoclassical perspective, which of the following would most likely be viewed as an element that underpins long-run productivity growth in the economy?
A. flexible price levels
B. flexible market forces
C. investments in human capital
D. higher unemployment

Expert Answer

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From a neoclassical perspective, investments in human capital is the most likely element that underpins long-run productivity growth in the economy.


Human capital refers to the knowledge, skills, and abilities of a workforce. Neoclassical economists believe that investments in human capital, such as education and training, make workers more productive and lead to higher long-run economic growth.


The other options are not as likely to be viewed as elements that underpin long-run productivity growth from a neoclassical perspective:

Flexible price levels: Flexible price levels can help the economy to adjust to shocks and return to its long-run equilibrium, but they are not essential for long-run productivity growth.

Flexible market forces: Flexible market forces can help to promote efficiency and innovation, but they can also lead to short-term fluctuations in output and employment. Neoclassical economists believe that these short-term fluctuations are outweighed by the long-term benefits of flexible market forces.

Higher unemployment: Higher unemployment is not a necessary condition for long-run productivity growth. In fact, neoclassical economists believe that high unemployment can lead to a loss of human capital and other negative consequences.

Therefore, the answer is C. investments in human capital.

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