New growth theorists believe that
A. inventions spread very rapidly, thereby curtailing the need for more innovations.
B. economic growth is due to capital spending and not research and development spending since much research and development spending fails to produce an invention.
C. economic growth comes from innovation.
D. economic growth comes only from saving.
Answer: C
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Last year's price level was 120 and since then there has been a 5 percent inflation. This year's price level is
A) 125. B) 126. C) 130. D) none of the above.
The following is not an appropriate way to tell whether two variables are cointegrated:
A) see if the two variables are integrated of the same order. B) graph the series and see whether they appear to have a common stochastic trend. C) perform statistical tests for cointegration. D) use expert knowledge and economic theory.
If a good is produced by firms that generate external costs, the price consumers pay
A) will be efficient as long as it equals the marginal costs of the firms. B) will be too low. C) will be too high because the consumers end up paying the costs instead of the firm. D) will be the correct price, but the quantity sold of the good will be too large.
The group that sets the Federal Reserve Systems policy on buying and selling government securities (bills, notes, and bonds) is the:
A. Federal Deposit Insurance Corporation (FDIC). B. Federal Bond Sale Authority. C. Council of Economic Advisers. D. Federal Open Market Committee (FOMC).