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? 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. 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. 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. d) Societies may still squander the wealth created by capital accumulation and in the long-run limit the growth of the economy. e) All of the above

Capital accumulation is a fundamental concept in classical economics, emphasizing the role of…

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Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter16: Economic Growth

Section: Chapter Questions

Problem 5E

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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?

		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.
		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.
		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.
		d) Societies may still squander the wealth created by capital accumulation and in the long-run limit the growth of the economy.
		e) All of the above

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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