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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