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41) According to the text, an open economy is likely to have all the following EXCEPT

A) high economic growth.

B) relatively more trade barriers.

C) high technological progress.

D) relatively more rapid spread of ideas.

42) Innovation is

A) another term for something new.

B) the transformation of an invention into something that is useful to humans.

C) the term for invention when a firm obtains a patent.

D) the term for inventions in the electronic and computer industries.

43) Which of the following statements is NOT consistent with new growth theorists' beliefs?

A) Innovation can lead to lower productivity costs.

B) Inventions are much more important than innovation.

C) Technology must be understood in terms of what drives it.

D) Rewards lead to technological advances.

44) New growth theorists believe that

A) wealth creation comes from innovation.

B) wealth creation comes from saving.

C) wealth creation is due to capital spending and not research and development spending since much research and development spending fails to produce an invention.

D) inventions spread very rapidly, thereby curtailing the need for more innovations.

45) Paul Romer's theory of economic growth differs from traditional theories in that

A) Romer argues that investment in capital goods is not important in encouraging growth while investment in human capital is, whereas traditional theorists emphasize both human and physical capital.

B) Romer argues that investment in human capital always occurs before investment in physical capital, while traditional theories emphasize the priority of physical capital.

C) Romer argues an investment-knowledge cycle can exist, but requires constant increases in investment rates, while traditional theories argue that investment rates can be constant.

D) Romer argues an investment-knowledge cycle allows a one-time increase in investment to permanently increase a country's growth rate, while traditional theory argued such an investment would have only a short-term effect.

46) According to Romer,

A) capital drives economic growth.

B) invention drives economic growth.

C) ideas drive economic growth.

D) government drives economic growth.

47) According to new growth theorists, more technological improvements can be brought about by

A) a government policy that encourages increased consumption.

B) government policies that lead to increases in human capital.

C) tougher immigration laws.

D) the government taking a more active role in regulating industries.

48) Which one of the following helps preserve incentives to develop new technologies?

A) patents

B) tariffs

C) quantity restrictions on imports

D) income taxes

49) According to the new growth theory,

A) technology should be considered as a factor of production.

B) technology plays a minor role in economic development.

C) technology provides few rewards to the society.

D) technology is a natural by-product of invention.

50) New growth theory emphasizes all of the following EXCEPT

A) technology.

B) import restrictions.

C) research and development.

D) innovation.


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