Paul Romer's theory on the importance of knowledge differs from traditional theory in that Romer
A) argues, that investment is not important in promoting growth, but that the acquisition of knowledge is the sole determinant of economic growth.
B) argues that an investment-knowledge cycle allows a once-and-for-all increase in investment to permanently raise a country's growth rate, while traditional theory argues that a once-and-for-all increase in investment leads to a higher standard of living but not to a higher growth rate.
C) argues, that an investment-knowledge cycle exists which requires that investment rates keep increasing or else growth rates will fall, while traditional theory argues that growth rates will not fall, although they will not increase either.
D) emphasizes investment rates while traditional theory emphasizes the importance of knowledge as a factor of production.
B
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The level of equilibrium expenditure at each price level determines
A) full employment. B) the points on the AE curve. C) the points on the AD curve. D) aggregate planned production. E) the price level.
When Javier's income increases by $5,000, he spends an additional $3,750 dollars. This implies that his marginal propensity to consume is 0.75
Indicate whether the statement is true or false
"Leaning against the wind" is exemplified by a(n)
a. tax increase when there is a recession. b. decrease in the money supply when there is a recession. c. increase in government expenditures when there is a recession. d. All of the above are correct.
Pareto points in the Edgeworth Box are
A. found when utility curves are tangent. B. found when MRS are equal. C. found when one person cannot be made better off without making another person worse off. D. all of these answer options are correct. E. none of these answer options are correct.