PRINC. OF ECON. LOOSE W/APLIA+COUPON
7th Edition
ISBN: 9781337365635
Author: Mankiw
Publisher: CENGAGE C
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Chapter 25, Problem 4QCMC
To determine
Diminishing returns of capital and growth.
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Because capital is subject to diminishing returns,higher saving and investment do not lead to highera. income in the long run.b. income in the short run.c. growth in the long run.d. growth in the short run.
If a country's saving rate increases, what happens in the long run?
a.
Productivity increases.
b.
Real GDP per person decreases.
c.
Productivity does not change.
d.
Real GDP per person does not change.
Productivity is one of the most important factor in any economy.
This can be as part of labor or other factors of production.
Explain that how capital can enhance productivity in an economy
Chapter 25 Solutions
PRINC. OF ECON. LOOSE W/APLIA+COUPON
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- In the long run, capital deepening, a. doesn't change the level of productivity or income. b. raises the levels of both productivity and income. c. Raises the level of productivity but not the level of income. d. raises the level of Income but not the level of productivityarrow_forwardQuestion 5 Investment in Country X increased from $4.445 million in 1998 to $4.909 million in 1999 at current market prices. In the same period, according to a government report, overall economic growth in Country X was 3.8%. (a) What is meant by investment? (b) In the first sentence of the article you will find the phrase ‘current market prices’. What does this mean? (c) Define what is meant by economic growth. (d) Explain the link between a rise in investment and a rise in economic growth. (e) Explain what benefits economic growth can bring to a country.arrow_forwarda)Distinguish between investment and capital, b) Explain the difference between an invention and an innovation. Give an example of each.arrow_forward
- The long-run effects of an increase in the saving rate include...? a. a higher level of productivity. b. a higher growth rate of productivity. c. a higher growth rate of income. d. All of the above are correct.arrow_forwardThe COVID-19 pandemic has caused an unprecedented increase in savings in many countries around the world. In the EU, the savings rate of households has jumped from 12.5% to 17%. In 2008-2009, it had moved from 12.5% to 14% (Dossche and Zlatanos 2020). Even if the source of 2020 surge in savings is different from the one of 2008, it is obvious that this increase does not result in more investment and growth. QUESTION: 1. Evaluate if and how increased savings in recession can influence consumption, export, and investmentarrow_forward72) According to new growth theory, the accumulation of ________ capital is subject to diminishing returns at the ________ level, but not at the level of the economy as a whole. A) physical; firm B) technological; personal C) knowledge; firm D) physical; production 73) Because knowledge capital is nonexcludable and nonrival, firms have an incentive to ________ the research and development of other firms. A) make bids on B) not use C) ignore D) free ride on 74) When firms benefit from the results of research and development they didn't pay for, we say firms A) are litigious. B) free ride. C) invest in knowledge capital. D) maintain a level playing field. 75) For how long does a patent give a firm the exclusive legal right to a product? A) 10 years B) 17 years C) 20 years D) 50 years 76) A copyright grants the creator of a book, film, or piece of software exclusive legal rights to use the creation for how long? A) 10 years B)…arrow_forward
- What are three generators of economic growth? List and explain them. What are three determinants of business investment? List and explain themarrow_forwardAnswer the below d. Suppose that society decided to reduce consumption and increase investment.i. How would this change affect economic growth? ii. What groups in society would benefit from this change? iii. What groups might be hurt?arrow_forwarda. when refer to the real GDP growth table, some states had the fastest annual economic growth. Discuss are the states with the fastest growing economies always the states with the largest nominal GDP? b.nominal GDP or real GDP provide more accurate picture of the growth in a state? why c. benefits of economic growth.arrow_forward
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