Are countries that began modern economic growth more recently doomed to be permanently poorer than the countries that began modern economic growth in earlier periods? Explain.
What will be an ideal response?
The general answer to the question is no. Countries that began modern economic growth more recently are not doomed to be permanently poorer than the countries that began modern economic growth in earlier periods. The reason is that the leader countries rely heavily on their growth by using technology. But to continue to grow they need to develop new technology. Such new technology takes time to develop and this slows the rate of growth in leader countries. By contrast, follower countries can simply adapt and adopt the existing technology from the leader countries. This adoption process helps speed economic growth in these follower countries. The higher growth rate means that standards of living can improve significantly and help them catch up to the leader nations.
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An increase in consumption, investment, or net exports caused by a decrease in government purchases is known as
A) crowding in. B) a closed economy. C) crowding out. D) demand-side effects.
An increase in the capital stock will
A) flatten the production function. B) steepen the production function. C) shift the production function upward. D) shift the production function downward.
According to the real business cycle theory, an increase in an input price, such as oil, will
A) increase both real Gross Domestic Product (GDP) and the price level. B) increase real Gross Domestic Product (GDP) but not change the price level. C) decrease real Gross Domestic Product (GDP) but increase the price level. D) decrease both real Gross Domestic Product (GDP) and the price level.
If the firm hires 5 workers, the average cost equals
a. $10 b. $1000 c. $80 d. Need more information