9) Proponents of the new growth theory argue that which of the following is a de
ID: 1107423 • Letter: 9
Question
9) Proponents of the new growth theory argue that which of the following is a determinant of economic growth? A) The quality and size of the nation's educational system B) The proportion of income that goes into research and development C) An effective system of patent probection D) All of the above 10) According to new growth theory, as technology becomes more important to growth so does A) increasing taxes capital. B) increasing trade barriers. D) military spending 11) Which of the following will NOT lead to increased capital investment within a country? A) increased certainty about being able to reap the gains from investing B) the decreased possibility of nationalization of private property C) increased uncertainty about private property rights D) increased certainty about private property rights 12) Well-defined property rights give entrepreneurs the incentive to 12) A) engage in risky business endeavors in order to accumulate future wealth B) lobby Congress in order to increase environmental regulations. C) evade taxes. D) use the eminent domain laws to seize property for public use. 13) Economists have found that as a nation's per capita real Gross Domestic Product (GDP) increases 13) A) there is no effect on population growth. B) the rate of population growth increases at the same rate as economic growth. C) the rate of population growth declines. D) the rate of population growth experiences dramatic increases 14) The three stages of economic development include 14) A) the agriculture stage, the manufacturing stage, and the socialist stage. B) the computerized stage, the agriculture stage, and the manufacturing stage. C) the agriculture stage, the manufacturing stage, and the service sector stage. D) the feudal stage, the agriculture stage, and the totalitarian stage 15) The long run aggregate supply curve (LRAS) also represents 15) A) the full-adjustment level of output. C) the full-information level of output B) the full-employment level of output. D) all of the above. 16) Which of the following will NOT cause a leftward shift in the Long-Run Aggregate Supply curve? 16) A) a reduction in the amount of capital C) a reduction in government spending B) a reduction in the amount of oil D) a net outflow of human capitalExplanation / Answer
9. Option D
New growth theory argues that an economy which spends on both innovation and invention and invests in human capital would grow much faster than the other economies. Also there should be reward for research and development, which are in the form of patents to foster healthy competition in the market.
10. Option C
Investing in human capital is equally important. Inventions are useless until innovation transforms them into goods and services which is done with the help of human capital.
11. Option C
Uncertainity about private property rights would result into less or no capital investment in the country by private players.
12. Option A.
When property rights are defined, the private players can take risk for their efforts.
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