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:

Disposable Income

The sum of money families can use for expenditures and savings once income taxes are deducted.

Necessities

Fundamental needs required for sustaining human life, such as food, water, shelter, and clothing.

Economic Activity

Any action that involves the production, distribution, and consumption of goods and services at all levels within a society.

Declining

A phase in the product life cycle where sales and profits begin to decrease as the product loses market interest or becomes obsolete.