Question #22
Reading: Reading 6 Economic Growth
PDF File: Reading 6 Economic Growth.pdf
Page: 11
Status: Unattempted
Correct Answer: A
Question
Which of the following concepts is uniquely associated with the endogenous growth theory of economic growth?
Answer Choices:
A. No diminishing returns to knowledge capital
B. Real gross domestic product (GDP) growth based on investment in new capital and technological change
C. Increased spending on health care and population growth
Explanation
Knowledge capital is a special type of public good because it is not subject to the law of
diminishing returns. This is a key element of endogenous growth theory. The implication is
that, unlike the classical or neoclassical growth theories, economic growth is not limited.