Many rapidly developing countries in East Asia have pursued government policies, which encourage savings. According to the neoclassical growth model, if these policies stimulate savings but do not encourage technology growth, then these policies
a. will have no effect on the level of output.
b. will increase output growth permanently.
c. will increase output growth in the short-run, but not in the long-run.
d. will have no effect on the growth of output in the short-run or the long-run.
e. none of the above.
C
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The implicit rental rate for capital includes the
A) total value of a piece of capital equipment. B) interest income forgone by purchasing the piece of capital equipment. C) firm's normal profit. D) amount paid for the use of a piece of capital equipment owned by someone else.
If congress and the federal reserve bank both wished to encourage growth of productive capacity in an economy already close to full employment, it would be most appropriate to
a) increase interest rates by buying bonds on the open market b) use a tight money policy to decrease government spending c) reduce taxes on consumption, increase income taxes, and increase government transfer payments d) reduce interest rates by engaging in open market operations and raise taxes on personal income e) increases capital gains taxes and decrease the money supply