In the Romer Model, Output Is Increasing in ________ and Decreasing

question 69

Multiple Choice

In the Romer model, output is increasing in ________ and decreasing in ________.

• A) the saving rate; the depreciation rate
• B) the research share; the growth rate of knowledge
• C) the growth rate of knowledge; the fraction of population in the ideas sector
• D) the growth rate of knowledge; the depreciation rate
• E) the saving rate; the growth rate of knowledge

---

Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Fixed Costs

Costs that do not change with the level of goods or services produced in the short term.

Short Run

A period in economics where at least one factor of production is fixed, limiting the firm's ability to adjust to changes in market demand.

Variable Costing

An accounting method where variable costs are charged to cost units and fixed costs are treated as period costs.