Quiz2_answers

Quiz2_answers - Economic Development Quiz 2 Answer Key 1....

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Economic Development Quiz 2 Answer Key 1. In the classical growth model, growth takes place through which of the following cycles? A) Higher consumption-> Higher aggregate demand –> Rise in prices-> Increase in supply-> Growth B) Savings-> Investment -> Increase in capital stock-> Growth C) Investment in education-> Human capital->Labor productivity increase->Growth D) Technological change->Productivity increase->Growth Answer: B 2. The underlying assumption of the Harrod-Domar growth model is that A) The incremental capital-output ratio is given by k = Y/K. B) Growth is mainly determined by capital accumulation through savings C) Growth can be sustained only if agricultural productivity rises. D) Developing countries save too much and invest too little. Answer: B 3. The Solow growth model A) Shows the importance of technological spillovers B) Explains the rate of technological growth C) Correctly predicted that growth rates would accelerate as countries become richer. D) Shows that technological growth is the source of income growth but does not explain
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Quiz2_answers - Economic Development Quiz 2 Answer Key 1....

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