According to New Growth Theory

question 122

Multiple Choice

According to new growth theory

• A)technological change is influenced by economic incentives.
• B)centrally-planned economies are the most efficient.
• C)growth in real GDP per capita occurs only if there are increasing returns.
• D)economic growth is determined by forces outside the control of the market system.

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Definitions:

Financial Leverage

The use of borrowed capital (debt) to increase the potential return of an investment.

Capital Structure

The blend of loans and shareholder capital utilized by a corporation to support its operational activities and development.

Debt

Borrowed money that is expected to be repaid in the future, typically with interest.

Cash Flow to Creditors

The sum of interest payments and net new borrowings, representing the cash flow from a company to its creditors during a period.