Final answer:
It is false that Robert Solow developed the IS-LM model; that was done by Sir John Hicks. Solow is known for the Solow-Swan growth model. Additionally, the modernization theory has not conclusively established a causal link between economic growth and democratic institutions.
Step-by-step explanation:
The statement that Robert Solow developed the IS-LM model is false. The IS-LM model, which stands for Investment-Saving/Liquidity-Money, was developed by Sir John Hicks in 1937, derived from John Maynard Keynes's 'The General Theory of Employment, Interest, and Money.' Robert Solow, on the other hand, is well-known for his work on the Solow-Swan neoclassical growth model, which he developed separately from the IS-LM model. This model helps to explain long-term economic growth based on capital accumulation, labor or population growth, and increases in productivity, primarily through technological advances.
Regarding the modernization theory and its claim about the relationship between economic growth and democratic institutions, the statement is largely false. The modernization theory suggests that economic growth may lead to the development of democratic institutions; however, there is no definitive causal link established. Both economic growth and democracy are complex phenomena influenced by numerous variables, and while there is evidence suggesting a correlation, asserting a clear causal link has proven to be more challenging. Many modern economists, such as Solow, have contributed to this understanding by acknowledging the multifaceted nature of economies and the need for comprehensive analysis.