Question : 111) With respect to long-run economic growth, one rationale for : 1384437

111) With respect to long-run economic growth, one rationale for the idea that there may be increasing marginal returns to investment is that

A) as further investment takes place the economy moves down to the right along the marginal product schedule.

B) as further investment takes place the economy moves upward to the left along the marginal product schedule.

C) the investment costs to “followers” are lower than those for “pioneers.”

D) initial investment shifts the the investment demand schedule to the left, making further investment less costly.

E) initial investment shifts the the aggregate demand schedule to the left, making further investment less costly.

112) According to some modern theories of long-run economic growth, successive increments of investment have ________ returns since some fixed costs are ________ for subsequent firms.

A) constant; identical

B) increasing; lower

C) increasing; higher

D) decreasing; higher

E) decreasing; lower

113) In new theories of “endogenous growth,” increasing marginal returns to investment can occur because

A) investment costs for followers can be higher than for pioneers.

B) knowledge provides the input that allows investment to be profitable.

C) many investments require large fixed costs, the benefits of which are not available to subsequent firms.

D) little risk is associated with the process of innovation for technological followers.

E) early investors create an infrastructure favorable to followers.

114) Compared to Neoclassical growth theory, newer “endogenous growth” theories are more ________ regarding the prospect of continuous increases in the standard of living, due in part to its emphasis on the ________.

A) pessimistic; endogeneity of technological change

B) pessimistic; accelerating depletion of natural resources

C) pessimistic; increasing birth rates as a result of higher real income per capita

D) optimistic; accelerating depletion of natural resources

E) optimistic; endogeneity of technological change

115) Given the rapid growth of world population in recent decades, the present needs and aspirations of the world’s population can likely only be met through

A) enormous increases in financial capital.

B) increasing knowledge and technological improvements.

C) reductions in the world’s capital stock, as a means of controlling the exhaustion of natural resources.

D) coordination of fiscal and monetary policies.

E) relatively small increases in the saving rates of the developing economies.

116) Modern growth theories are more optimistic than Neoclassical growth theories because the former emphasize the unlimited potential of

A) modern capital.

B) knowledge-driven technological change.

C) more educated government policy making.

D) modern labour.

E) economic theory.

117) Which of the following statements is true of new growth theory, and not true of Neoclassical growth theory?

A) It cannot explain improved living standards over the long term.

B) It can explain improved living standards over the long term.

C) Economic growth does not have an impact on resource exhaustion.

D) Economic growth depends only on population growth.

E) Economic growth is the result of innovation.

118) Investment in innovation is often considered to have increasing marginal returns because

A) new products increase firms’ profits.

B) R&D costs are negligible relative to firms’ total costs.

C) innovation is mostly through “leaning by doing.”

D) of market development costs and the “public good” nature of knowledge.

E) after the initial investment is made, subsequent investors face more difficult and expensive production problems.

119) Consider the competing products made by Apple (iPhone) and Samsung, for example. The innovation generated by these firms as a result of their intense rivalry is an example of

A) covert collusion.

B) constant returns to scale.

C) exogenous technological change.

D) endogenous technological change.

E) decreasing marginal returns.

120) In new theories of economic growth, “learning by doing” contributes to endogenous technological change because

A) knowledge can be considered a private good.

B) knowledge can be considered a public good.

C) information at all stages of the design and production processes is fed upstream and contributes to further innovation.

D) “learning by doing” increases the marginal product of physical capital.

E) new technical knowledge can be transferred at zero cost.