revmid2ansm11 - Second challenge: Review Solutions Eco 212:...

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Second challenge: Review Solutions Eco 212: Summer 2011 Short answer questions (1-3 sentences) Question 1. a. b. Disembodied technical change. By boosting disembodied technical change, we increase long run growth. c. Shorter lifespans imply less spending on education, which largely pays oF later in life. So we have a reduction in technical change here which is embodied in the labor input. In addition, shorter lifespans means there is less incentive to save for retirement, reducing investment spending and new capital formation embodied with the latest technologies. Both eFects reduce long run growth. Question 2. Strong patent protection increases the return to inventing. This normally produces more inventions and long run growth. Giving inventors a strong incentive to patent their inventions also means their research designs are revealed to the public, which can spur further innovation and long run growth. However, as pointed out in class, longer patent periods can reduce the incentives to invent by the holder of the patent. In addition, over-granting of patents for
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This note was uploaded on 01/08/2012 for the course ECO 212 taught by Professor Lorca,m during the Summer '08 term at University of Miami.

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revmid2ansm11 - Second challenge: Review Solutions Eco 212:...

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