Currency outside of banks increases from 100 million to 200 ...

[kfurse]

Currency outside of banks increases from 100 million to 200 million. This change is considered
 
  A) a currency drain.
  B) a decrease in the monetary base.
  C) expansionary monetary policy.
  D) contractionary monetary policy.

Question 2

According to the neoclassical growth theory, national incentives to save, invest, accumulate human capital, and develop new technology influence the country's growth rate of real GDP. Comment on the accuracy of the previous statement.
 
  What will be an ideal response?

[bhavsar]

Answer to Question 1

A

Answer to Question 2

The sentence is inaccurate. The neoclassical growth theory says that a nation's growth rate of real GDP depends on the growth rate of technology. The neoclassical growth theory assumes that the growth rate of technology is the result of chance and luck. It is the new growth theory that asserts that growth depends on people's incentives, so it is the new growth theory that predicts that a nation's growth rate depends on its national incentives to save, invest, accumulate human capital, and develop new technology.

[kfurse]

Excellent

[cdmart10]

Gracias!