In the Romer model, if Canada and Taiwan have the same fraction of researchers and the same knowledge efficiency parameter but Canada's population is larger, then:

Question

Quizplus · Accepted Answer

The Romer model predicts that per capita output growth depends on the fraction of researchers and the knowledge efficiency parameter. Since Canada and Taiwan have the same fraction of researchers and the same knowledge efficiency parameter, the only difference in their growth rates will be due to differences in their population sizes. The Romer model predicts that per capita output growth will be higher in smaller countries, so Taiwan will have a higher per capita output growth rate than Canada. However, since Canada has a larger population, it will have a higher overall output growth rate than Taiwan. Therefore, choice B is the correct answer.

In the Romer Model, If Canada and Taiwan Have the Same