Author Question: In order to determine a household's budget line, you must know the A) prices of the goods bought ... (Read 94 times)

melina_rosy · **on:** Jun 29, 2018

In order to determine a household's budget line, you must know the

A) prices of the goods bought and the household's income.
B) prices of the goods bought, but not the household's income.
C) household's income, but not the prices of goods bought.
D) household's income, prices of the goods bought, and the household's preferences.

Question 2

Explain the role played by technological change in classical growth theory, neoclassical growth theory, and new growth theory.

What will be an ideal response?

lkoler · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

Technology plays a secondary role in classical growth theory. While technology might increase real GDP in the classical growth model, population changes drive real GDP per person back to a subsistence level of income. Technology also plays a secondary role in neoclassical growth theory. Neoclassical theory has technological change bringing about an increase in real GDP but diminishing returns brings an end to economic growth. The new growth theory emphasizes the role of technological change in creating continuous growth because entrepreneurs have an incentive to develop new technologies as a means of generating profits for themselves.