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Question
Paul Romerʹs theory of economic growth differs from traditional theories in that
A) Romer argues that investment in capital goods is not important in encouraging growth while investment in human capital is, whereas traditional theorists emphasize both human and physical capital.
B) Romer argues that investment in human capital always occurs before investment in
physical capital, while traditional theories emphasize the priority of physical capital.
C) Romer argues an investment -knowledge cycle can exist, but requires constant increases in investment rates, while traditional theories argue that investment rates can be constant.
D) Romer argues an investment -knowledge cycle allows a one-time increase in investment to permanently increase a countryʹs growth rate, while traditional theory argued such an investment would have only a short-term effect.
Answer
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