Describe new growth theory. Explain how it differs from neoclassical growth theory
Economists, such as Paul Romer, who adhere to new growth theory, believe that technology is endogenous. This means that technology is part of the economic system and that the amount and quality of technology that is developed varies directly with the amount of resources devoted to it. Neoclassical growth theory advocates emphasized only labor and capital and believed that technology was exogenous. Therefore, they held that technology was outside of our control.
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An increase in autonomous investment in a small open economy will cause ________
A) a trade surplus to shrink B) a trade deficit to increase C) lower net capital outflows D) all of the above E) none of the above
Suppose quantity demanded is given by Qd = 100 - P, and quantity supplied is given by Qs = 20 + 3P. In this case, equilibrium price, P*, and equilibrium quantity, Q*, are as follows:
A. P*= 80, Q*= 20 B. P*= 20, Q*= 80 C. P*= 10, Q*= 90 D. P*= 40, Q*= 140