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9.4  New Growth Theory and the Determinants of Growth

1) Proponents of the new growth theory argue that which of the following is a determinant of economic growth?

A) An effective system of patent protection

B) The quality and size of the nation's educational system

C) The proportion of income that goes into research and development

D) all of the above.

2) Which of the following are mentioned as forces of the new growth theory that influence economic growth?




A) I only

B) I and II only

C) I and III only

D) II and III only

E) I, II, and III

3) A key idea of the new growth theory is that

A) technology is not an important determinant of economic growth.

B) economic growth is not as important as leisure time growth.

C) the greater the rewards for technological advances, the greater the number of technological advances.

D) the rewards associated with technological advances have little to do with the actual rate of invention or innovation.

4) New growth theory supports the idea that

I.economic growth can continue as long as we keep finding new ideas.

II.increases in human capital can lead to greater rates of economic growth.

A) I only

B) II only

C) Both I and II

D) Neither I nor II

5) According to the new growth theory, economic growth will continue with

A) the development of new ideas.

B) increases in population growth.

C) increases in interest rates.

D) an increased focus on labor-intensive jobs.

6) All of the following are factors that raise economic development EXCEPT

A) establishing a legal system.

B) an educated work force.

C) reducing trade barriers.

D) government control of the country's resources.

7) Innovation typically increases when

A) market incentives and private property rights are encouraged.

B) government controls the resource base.

C) high taxes are present.

D) the legal system is weak.

8) The development of a strain of wheat that will yield two crops per year rather than one crop per year is an example of economic growth resulting from

A) capital accumulation.

B) increased gross investment.

C) technological progress.

D) an increase in per capita real income.

9) According to new growth theory, as technology becomes more important to growth, so does

A) human capital.

B) military spending.

C) increasing taxes.

D) increasing trade barriers.

10) Economists typically agree that the special protection given to owners of patents tends to

A) reduce expenditures on research and development.

B) increase expenditures on research and development.

C) reduce economic growth.

D) reduce productivity.


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