The Idea That Technological Innovation Has Temporarily Dried Up Rests

question 51

Multiple Choice

The idea that technological innovation has temporarily dried up rests on the argument that

• A) greater competition from foreign countries has reduced the capital firms have to invest in research and development.
• B) government support of research and development has fallen, reducing the amount of technological innovation that occurs.
• C) the backlog of technological opportunities not exploited during the Great Depression and World War II has largely been used up.
• D) government "red tape" has prevented many innovations from coming to market.

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Definitions:

Real Interest Rate

The interest rate that has been modified to account for inflation, showing the real cost of borrowing or the genuine investment return.

Fisher Effect

an economic theory proposing that the real interest rate is independent of monetary measures, especially the nominal interest rate and inflation rate.

Nominal Interest Rate

The rate of interest before adjustment for inflation; the stated or advertised interest rate on a loan or investment.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield on lending.