An important foundation of the new growth theory is that
A) we will get more technological advances the more the government is involved.
B) we will get more technological advances when the rewards for producing them are greater.
C) the growth rate of the capital stock is more important than the growth rate of new knowledge in generating economic growth.
D) improvements in labor productivity are poor measures of technological growth.

Question

Quizplus · Accepted Answer

The new growth theory focuses on the importance of incentives, particularly the rewards for producing new technologies, in generating economic growth. This is in contrast to the traditional neoclassical growth theory, which emphasizes the role of capital accumulation and labor productivity in economic growth.

An Important Foundation of the New Growth Theory Is That