New Growth Theory Proposes That Real GDP Per Person Grows

question 299

Multiple Choice

New growth theory proposes that real GDP per person grows because of ________ and that growth ________.

• A) the pursuit of profit; can persist indefinitely
• B) productivity shocks; can persist indefinitely
• C) technological change; can only increase above the subsistence level temporarily
• D) productivity shocks; occurs randomly

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Definitions:

Capital Gains

The profit realized from the sale of a capital asset, like stocks or real estate, when the sale price exceeds the purchase price.

Interest Income

Earnings received from deposit or investment accounts, such as savings accounts, bonds, or loans.

Taxable Income

Income on which tax must be paid; total income minus exemptions and deductions.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), expressing the percentage of income that goes to taxes.