The new growth theory states that O A. tems wil add to an economy\'s stock of kn

Question

The new growth theory states that O A. tems wil add to an economy's stock of knowledge capital by engaging in researchand development or by contributing to techoological change B. grown n labor productivity is a squicant tactor n brngng about long-run gowth in real GDP per capta O C. frms will ad to an economy's stock of physical capital leading to increases in real GDP but at a ncreasing rate O D. knowledge captal is subject to decreasing returns at the level of the whole economy but increasing retures al the lem leve The new growh theory difers from the growth theory developed by Robert Solow, since O A. the new growth theory focuses on technolagical change and the quanity of capsl vailable to workers whereas the Sokow growth theory states that accumulatien of knowledge captal s a key O B the new growith theory says that physical captal is nonrival and nonexcludatje and the Solow growth theory states that knoakedge capital is nonrival and nonexcludable and is a key determinant of O C. the Solow growth theory says that the rate of technologcal change is nfuenced by how indviduals and fems respond to economic ncentives, whereas the new growth theory leaves technological O D. the Solow growth theory tocuses on technologikal change and the quantity of capital avaiable to workers whereas the new growth theory states that accumulation of knowledge capital is a key determnant of economic grow economic growth change unexplaned delermnant of econonic growth

Explanation / Answer

Ans:

1) Option A

firms will add to an economy's stock of knowledge capital by engaging in research and development or by contributing to technological change.

2) Option D

the Solow growth theory focuses on technological change and the quantity of capital available to workers whereas the new growth theory states that accumulation of knowledge capital is a key determinant of economic growth.

The new growth theory is an economic growth theory which states that peoples desires and unlimited wants encourage for the development of productivity and economic growth. As per new growth theory the peoples pursuit of profits will increases the real GDP per person perpetually. Hence peoples knowledge capital is the determinant of economic growth.

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