In the Romer Model, with Decreasing Returns to the Knowledge

question 113

Multiple Choice

In the Romer model, with decreasing returns to the knowledge sector:

• A) the number of researchers is irrelevant to long-term per capita income.
• B) more researchers produce more ideas, raising the long-run growth rate of per capita income.
• C) more researchers produce fewer ideas, raising the long-run growth rate of per capita income.
• D) more researchers produce more ideas, raising the long-run level of per capita income.
• E) more researchers cause the knowledge stock to contract.

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Definitions:

Commercial Draft

A written order from one party to another, directing the payment of a specified sum of money to a third party, often used in trade.

Banker's Acceptance

A short-term debt instrument issued by a company but guaranteed by a bank, commonly used in international trade.

Trade Acceptance

A written promise or a draft by one party, the seller, to another, the buyer, to pay a specified sum of money at a future date.

Sight Draft

A financial instrument that is payable on demand when presented to the drawee.