Answer the following: (Choose the options below) Q#5) Consider a prosperous country with an advanced economy which could invest trillions into its current capital stock – either moving “up” its current productivity “curve” (PC) or shifting to a new and higher productivity (PC) curve. Which approach is likely best for increasing the country’s living standards (Real GDP Per Person) through time? a) A continuous build-up of the current capital stock with established technology will achieve more – capital “deepening” with more capital for each worker. b) R&D that supports “cutting edge” invention and innovation will propel labor productivity to far higher levels – with higher quality capital Q#6) What is the best explanation for the correct answer to Q#5? An advanced economy will be a wealthy nation with a large capital stock and a high ratio of capital to labor. Thus, when expanding with standard capital technology from the past, it will operate in a region with: (a) strongly diminishing marginal returns to conventional capital investment (b) strongly increasing marginal returns to conventional capital investment
Answer the following: (Choose the options below)
Q#5) Consider a prosperous country with an advanced economy which could invest
trillions into its current capital stock – either moving “up” its current productivity
“curve” (PC) or shifting to a new and higher productivity (PC) curve. Which
approach is likely best for increasing the country’s living standards (Real GDP
Per Person) through time?
a) A continuous build-up of the current capital stock with established technology
will achieve more – capital “deepening” with more capital for each worker.
b) R&D that supports “cutting edge” invention and innovation will propel labor
productivity to far higher levels – with higher quality capital
Q#6) What is the best explanation for the correct answer to Q#5? An advanced
economy will be a wealthy nation with a large capital stock and a high ratio of
capital to labor. Thus, when expanding with standard capital technology from
the past, it will operate in a region with:
(a) strongly diminishing marginal returns to conventional capital investment
(b) strongly increasing marginal returns to conventional capital investment
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