The AK endogenous growth model (Y = A

AK model: When K is interpreted broadly (including human capital) or when learning-by-doing externalities are present (Arrow, Romer), the social MPK does not diminish — it remains constant at A. This generates perpetual growth: g = sA − δ. There is no steady state and no convergence (unlike Solow). Option (A) is closer to Lucas (1988) but incomplete. Option (B) describes Romer (1990) with expanding product varieties — a different endogenous growth model. Note: Assertion-reason trap (from exam Q34 in PDF): “All endogenous growth models attribute growth to human capital/R&D” — FALSE. The AK model does not require R&D; it relies on broad capital or externalities. Different endogenous models have different engines of growth.