module 39 Growth Policy: Why Economic Growth Rates Differ 397
Tackle the Test: Free-Response Questions
- List and explain five different actions the government can take
to promote long-run economic growth.
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
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.
- What roles do physical capital, human capital, technology,
and natural resources play in influencing long -run
economic growth of aggregate output per capita?
Section 7 Economic Growth and Productivity