Paul Romer's theory on the importance of knowledge differs from traditional theory in that Romer
A) argues, that investment is not important in promoting growth, but that the acquisition of knowledge is the sole determinant of economic growth.
B) argues that an investment-knowledge cycle allows a once-and-for-all increase in investment to permanently raise a country's growth rate, while traditional theory argues that a once-and-for-all increase in investment leads to a higher standard of living but not to a higher growth rate.
C) argues, that an investment-knowledge cycle exists which requires that investment rates keep increasing or else growth rates will fall, while traditional theory argues that growth rates will not fall, although they will not increase either.
D) emphasizes investment rates while traditional theory emphasizes the importance of knowledge as a factor of production.
B
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Suppose you are in charge of product pricing and marketing strategy for a pharmaceutical company. You will have greater ability to independently set prices for your product if:
A) there are no close substitutes for your product. B) there are lots of other firms selling closely related products in your market. C) your market is perfectly competitive. D) none of the above
A decrease in government spending would
a. lower the interest rate, which is unlikely to influence private investment spending b. raise the interest rate and decrease private investment spending c. lower the interest rate and decrease private investment spending d. raise the interest rate and increase private investment spending e. lower the interest rate and increase private investment spending