In: Economics
43. Which of the following is LEAST likely to be a cause of long-term secular slowness in increases in U.S. labor productivity? (a) transition of the economy increasingly toward services and away from manufacturing; (b) falling levels of the capital to labor ratio; (c) deglobalization and the shift of production from places outside the U.S. to places within the U.S.; (d) tighter labor markets and the infusion of more and more workers with below-average skills.
44. Which of the following is a standard assumption of most growth models? (a) all investment should go strictly toward replacing depreciated capital goods; (b) there is a diminishing marginal return to capital investment; (c) investment funding is best spent on industries with the weakest productivity growth in order to bring them up to speed; (d) capital investment is the only truly important source of real economic growth.
Answer43: Correct option is option (a).
Explanation:
Trasition of labor from manufacturing sector to services sector will not affect the productivity as much as other factors in options. Decreasinf Capital-Labor ratio, deglobalisation and tighter labor markets will reduce labor productivity to a greater extent in comparison to transition from manufacturing sector to services sector.
Answer 44: Correct option is option (d).
Solow growth model, Harrod-Domar growth model, Kaldor- hick's model, etc. all advocate use of capital for economic growth.