Author Question: Paul Romer's theory of economic growth differs from traditional theories in that A) Romer argues ... (Read 139 times)

swpotter12 · **on:** Jun 30, 2018

Paul Romer's theory of economic growth differs from traditional theories in that

A) Romer argues an investment-knowledge cycle can exist, but requires constant increases in investment rates, while traditional theories argue that investment rates can be constant.
B) Romer argues that investment in human capital always occurs before investment in physical capital, while traditional theories emphasize the priority of physical capital.
C) Romer argues an investment-knowledge cycle allows a one-time increase in investment to permanently increase a country's growth rate, while traditional theory argued such an investment would have only a short-term effect.
D) Romer argues that investment in capital goods is not important in encouraging growth while investment in human capital is, whereas traditional theorists emphasize both human and physical capital.

Question 2

If consumption is 750 when real disposable income is 1,000, the average propensity to consume is

A) 0.50. B) 0.25. C) 0.80. D) 0.75.