Policymakers trying to promote economic growth must confront the issue of what kinds ofcapital the economy needs most. If policymakers decide to rely on the marketplace to allocatethe pool of saving to alternative types of investment,Those industries with the kinds of capital that yield the lowest marginal product willborrow the most.Those industries with the kinds of capital that yield the highest marginal product willborrow the least.All industries will have incentives to borrow more.Those industries with the kinds of capital that yield the highest marginal product willborrow the most.

Policymakers need to consider various variables while handling wide issues like joblessness,…

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,

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,

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 9SCQ: Would the following events usually lead to capital deepening? Why or why not? A weak economy in...

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Question

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.

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