Question 1
Higher energy prices in the 1970s ________ labor productivity because a great deal of investment went into transforming the existing capital stock into more energy-efficient forms.
◦ had no impact on
◦ slightly increased
◦ reduced
◦ more than doubled
Question 2
Related to the E
conomics in Practice on p. 624: According to a study cited in the
Economics in Practice, if a country is relatively far from the technological frontier of the rest of the world, what would be its best strategy?
◦ The government needs to keep helping its firms find the world frontier until the firms reach the frontier.
◦ The government should begin by offering incentives and encourage some risk taking.
◦ The government needs to help its firms find the world frontier, and then as firms approach the frontier, the government should offer incentives and encourage some risk taking.
◦ The government should adopt a hands-off approach and let the private sector bring the country to the world frontier.
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