Describe the main ideas of endogenous growth theory. What does it have to say about the role of government in economic growth?
What will be an ideal response?
Endogenous growth theory explains the main sources of productivity growth: human capital (the knowledge, skills, and training of individuals) and technological innovation (caused by research and development programs and learning by doing). Government may play a positive role, because policies that increase the capital—labor ratio may lead to a virtuous circle of growth, raising living standards. Also, the government may foster education and research and development.
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Which of the following statistics is the best single measure of overall economic activity?
A) The labor force participation rate. B) The inflation rate. C) GDP. D) The trade surplus.
What happens to the Canadian M2 money supply if there is an excess demand of 100 million euros in the Canadian dollar:euro foreign exchange market and the Canadian central bank intervenes to offset the excess? Assume the M2 money multiplier is 3
a. The Canadian M2 money supply falls by 300 million euros worth of Canadian dollars. b. The Canadian M2 money supply rises by 300 million euros worth of Canadian dollars. c. The Canadian M2 money supply might fall or rise. d. The Canadian M2 money supply rises by 100 million euros worth of Canadian dollars. e. The Canadian M2 money supply falls by 100 million euros worth of Canadian dollars.
When price is $2
A. there is a surplus.
B. there is a shortage.
C. quantity demanded is less than quantity supplied.
D. price must fall to get to equilibrium.
What is a likely explanation for why the budget of a government agency might increase beyond its optimal size?
A. The paradox of voting B. The influence of the median voter C. The power of special-interest groups D. The allocative efficiency of government