Lesson 7: Economic Growth (revised) - Written Assignment 7

1.What are the two factors that lead to economic growth?Briefly discuss why each leads to economicgrowth.

2.Explain the classical growth theory.Make sure to include why the real wage is always driven to the subsistence level in the model.

Answer the following multiple choice questions.

3.An increase in labor productivity leads to an

a.increase in potential GDP

b.increase in the demand for labor.

c.increase in the real wage.

d.all of the above are true.

4.Neoclassical growth theory emphasizes

a.growth in capital per worker.

b.the concept of a subsistence wage.

c.labor supply and demand.

d.no limit to the increase in the standard of living.

5.New growth theory predicts that

a.economic growth is only temporary.

b.economic growth can last indefinitely

c.economic growth is eroded by changes in taxes.

d.government policies can do nothing to foster increased growth.