How might technological spillover explain why countries with high rates of population growth don't have higher per-capita income?
What will be an ideal response?
In the Romer model, population increase causes an increase in the rate of technological progress, because there are more people engaged in research and development. Technology, however, is not easily contained within national borders, so the technology available in each economy depends not on the size of its own population but, rather on the world technological frontier. A population increase in any one economy has an imperceptible effect on the technology in use in that economy. Though technological breakthroughs always occur "somewhere," they are quickly available "everywhere," so the growth impact in the economy of origin is not much different from the impact in other economies.
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If the demand increases in a perfectly competitive market, firms will likely:
A. experience a loss due to increased competition. B. set prices artificially higher permanently. C. enter the market in hopes of capturing some profits. D. have to engage in more advertising in order to further stimulate the increase in demand.
An increase in the price of a particular good, with all other variables constant, causes
a. a movement along a given supply curve to a lower quantity supplied b. a shift to a different supply curve with lower quantities supplied c. a movement along a given supply curve to a higher quantity supplied d. a shift to a different supply curve with higher quantities supplied e. no movement along a given supply curve unless demand also changes
Which of the following is not a question that economists try to answer when measuring the distribution of income?
a. How many people live in poverty? b. How often do people receive a raise at work? c. How often do people move among income classes? d. What problems arise in measuring the amount of inequality?
Refer to Figure a. If ? (the probability of state S) decreases, the x-intercept for the solid constant expected consumption line:
A. increases.
B. decreases.
C. does not change.
D. The answer cannot be determined without more information.