Page 439 - Krugmans Economics for AP Text Book_Neat
P. 439

Tackle the Test: Free-Response Questions
             1. List and explain five different actions the government can take  2. What roles do physical capital, human capital, technology,
               to promote long-run economic growth.                 and natural resources play in influencing long -run
                                                                    economic growth of aggregate output per capita?

             Answer (10 points)—10 points for 5 of the 6 possible actions/descriptions
             1 point: Build infrastructure.
             1 point: The government can provide roads, power lines, ports, rail lines, and                            Section 7 Economic Growth and Productivity
             related systems to support economic activity.
             1 point: Invest in human capital.
             1 point: The government can improve access to quality education.

             1 point: Invest in research and development.
             1 point: The government can promote technological progress by having
             government agencies support and participate in R&D.
             1 point: Provide political stability.
             1 point: The government can create and maintain institutions that make and
             enforce laws that promote stability.
             1 point: Establish and protect property rights.
             1 point: Growth is promoted by laws that define what property belongs to
             whom and by institutions that defend those property rights.

             1 point: Minimize government intervention.
             1 point: The government can limit its intervention in the economy and promote
             competition.












































                                        module 39      Growth Policy: Why Economic Growth Rates Differ          397
   434   435   436   437   438   439   440   441   442   443   444