Paul Romer's Theory on the Importance of Knowledge Differs from Traditional

question 45

Multiple Choice

Paul Romer's theory on the importance of knowledge differs from traditional theory in that

• A)Romer argues that an investment-knowledge cycle allows a once-and-for-all increase in investment to permanently raise a country's growth rate,while traditional theory argues that a once-and-for-all increase in investment leads to a higher standard of living but not to a higher growth rate.
• B)Romer argues that investment is not important in promoting growth,but that the acquisition of knowledge is the sole determinant of economic growth.
• C)Romer argues that an investment-knowledge cycle exists which requires that investment rates keep increasing or else growth rates will fall,while traditional theory argues that growth rates would not fall,although they would not increase either.
• D)Romer emphasizes investment rates while traditional theory emphasizes the importance of knowledge as a factor of production.

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Definitions:

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Recombinant Human Deoxyribonuclease

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A genetic disease affecting the lungs and digestive system, characterized by thick, sticky mucus leading to infections and digestion problems.