The capital accumulation theory of economic growth that economies attain growth through saving invested in increasing the capital resources in the economy fails to take account of which of the following factors?
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a) For capital accumulation to produce economic growth it has to be the right type of capital that can be applied to the production of goods desired by society.
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b) The capital created has to be efficient. Savings may be squandered by producing capital goods that consume a lot of resources to produce, produce poor quality goods, or are wasteful of other resources.
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c) For capital to be productive there must be appropriate infrastructure including transportation and communication systems, banking and legal systems, as well as requisite natural resources and often appropriately skilled labor.
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d) Societies may still squander the wealth created by capital accumulation and in the long-run limit the
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e) All of the above
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- Is it possible to have economic growth with no opportunity cost? A)Yes, economic growth requires no current sacrifices-only the passage of time. B) No, but economic growth is always worth whatever sacrifice is required. C) No, because growth depletes the stock of knowledge so that more growth today means less growth tomorrow D) No, because growth requires the sacrifice of consumption goods in order to invest in such things as capital tormation and research and development.Which of the following are true of capital as a determinant of economic growth? Check all that apply. Capital investment decreases per capita real GDP. Technological advances allow more output from the same amount of capital. As consumption increases, capital formation also increases. Countries with higher investment rates tend to have higher growth rates.Which of the following is unlikely to affect the rate of economic growth? Group of answer choices technological change the level of government spending the quality of available resources the quantity of available resources Which of the government policies below is most unlikely to encourage per capita economic growth? Group of answer choices the use of tax revenues for investment and capital formation promotion of education and training programs for workers high taxes on companies that spend a lot on capital formation special subsidies for capital-intensive forms of production Which of the following did not result in economic growth? Group of answer choices Installing a network of irrigation ditches and pumping stations in order to grow fruits and vegetables in parts of southern California. Many citizens emigrating from Zimbabwe when a politically repressive regime took office. The invention of a threshing machine for harvesting grains. Increased government…
- In 1776, Adam Smith ([1776] 1936) published his treatise, An Inquiry into Nature and Causes of the Wealth of Nations , which was taken by many to be a theory of economic growth. Smith, however, was clearly concerned with economic development. The classical school of economic thought, predominantly modeled after Smith, is largely geared toward understanding and explaining economic development. Smith presented a supply driven model of growth, where output was related to labor, land, and capital. Thus, economic growth, which is the increase in output, was related to population growth, investment, land growth, and increases in productivity. According to Smith, society was dependent on the economy’s ability to sustain its increasing workforce. Investment was dependent on the rate of savings. Land growth was dependent on the ability to acquire more land (through conquest) or on the increase in the productivity of existing land. He also believed in the division or specialization of labor as a…In 1776, Adam Smith ([1776] 1936) published his treatise, An Inquiry into Nature and Causes of the Wealth of Nations , which was taken by many to be a theory of economic growth. Smith, however, was clearly concerned with economic development. The classical school of economic thought, predominantly modeled after Smith, is largely geared toward understanding and explaining economic development. Smith presented a supply driven model of growth, where output was related to labor, land, and capital. Thus, economic growth, which is the increase in output, was related to populationgrowth, investment, land growth, and increases in productivity. According to Smith, society was dependent on the economy’s ability to sustain its increasing workforce. Investment was dependent on the rate of savings. Land growth was dependent on the ability to acquire more land (through conquest) or on the increase in the productivity of existing land. He also believed in the division or specialization of labor as a…Q) The economist of country A is considering the following list of policies. For each of the following policies, determine which factor of growth that the policy is related to((1) natural resources; (2) physical capital; (3) human capital; (4) technology; or(5) institutions): a) Government allows more workers to immigrate b) Government relaxes the regulations for firms to borrow c) Government lends money to farmers to buy machines. d) Government plants more trees to protect the environment. e)Government encourages citizens to vote Solve this early
- Question 9. Suppose that an economy has the following production function: Y = F(K, L) = K0.210.7, where Y is output, K is capital stock and L is the labour force. a. What is the per-worker production function? b. Assuming no population growth or technological progress, find steady- state capital stock per worker, steady-state output per worker, and steady-state consumption per worker as a function of the saving rate and the depreciation rate. c. Assuming that the depreciation rate is 10 percent per year. What level of capital stock per worker and saving rate maximize consumption per worker?A) If you are given a choice to live in a country with high level of GDP and low growth rate or to live in a low level of GDP and a high growth rate, which option would you choose and why? B) Assume a hypothetical society that decides to reduce consumption (production of consumption goods) and increase investment (production of capital goods). 1) How would this change affect economic growth? 2) What groups in society would benefit from this change? What groups might be hurt?Policymakers trying to promote economic growth must confront the issue of what kinds of capital the economy needs most. If policymakers decide to rely on the marketplace to allocate the pool of saving to alternative types of investment, Those industries with the kinds of capital that yield the lowest marginal product will borrow the most. Those industries with the kinds of capital that yield the highest marginal product will borrow the least. All industries will have incentives to borrow more. Those industries with the kinds of capital that yield the highest marginal product will borrow the most.
- Suppose that , the marginal product of efficiency units of labor, increases in the endogenous growth model. What effects does this have on the rates of growth and the levels of human capital, consumption, and output? Explain your results.The government can achieve permanent higher growth rates by having two determinants of growth. The two primary determinants of growth are capital accumulation and technological progress. Capital changes when there are changes in investment and therefore, the saving rate. Because the saving rate cannot increase forever, capital accumulation cannot cause permanent changes in economic growth. Technological progress on the other hand, can result in permanent changes in economic growth.Which one is true? labor productivity will be higher when the capital stock is larger and the rate of change in labor productivity remains the same as capital stock goes up. labor productivity will be higher when the capital stock is larger and the rate of change in labor productivity increases as capital stock goes up. labor productivity will be lower when the capital stock is larger and the rate of change in labor productivity remains the same as capital stock goes up. labor productivity will be higher when the capital stock per worker is larger but the rate of change in labor productivity will eventually decrease as capital stock per worker goes up.