Question

According to new growth​ theory, one way to create additional economic growth is by raising the level of​ firms' knowledge capital. Suppose government policymakers wanted to assist the country in the development of knowledge capital. Which of the following policies would lawmakers not want to use to help in the development of knowledge​ capital?

A. The government could increase the amount of scholarships to allow more people to gain additional training and college education.
B. The government could reduce corporate tax rates for service and retail companies.
C. The government could increase the level of funding for research grants to develop additional basic research.
D. The government could increase resources spent on assisting companies to enforce their patents.

Answer 1

The correct answer is option B.

Step-by-step explanation:

The new growth theory states that economic growth can be achieved by increasing the level of the knowledge capital of firms. To increase the knowledge capital the government can adopt certain policies.

All the policies mentioned here except the second one will help in increasing the level of knowledge capital. Providing scholarships, providing research grants, increasing resources spent on assisting companies to enforce their patents all will help in promoting research and development and increasing the knowledge base.