Exogenous Growth

    graph TD;
	    A[Technological Progress] --> B[Economic Growth]
	    C[Capital Accumulation] --> B
	    D[Savings Rate] --> C
	    E[Diminishing Returns] --> C

## Exogenous growth is primarily driven by: - [x] Technological progress independent of economic forces - [ ] Increased savings rates only - [ ] Government policies to increase labor supply - [ ] Increased demand for goods and services > **Explanation:** Exogenous growth hinges on technological advancements occurring independently of other economic conditions, not merely savings or demand shifts. ## In contrast to exogenous growth, endogenous growth suggests that: - [ ] Growth is dictated solely by foreign investment - [x] Growth can stem from internal economic factors and human capital - [ ] Technology does not significantly impact economic growth - [ ] There will always be diminishing returns to capital > **Explanation:** Endogenous growth focuses on how the economy can cultivate conditions for technological advancement through its internal mechanisms. ## What do diminishing returns in the context of exogenous growth mean? - [x] Increasing additional units of capital yields smaller increases in output - [ ] Every additional unit of capital yields the same growth rate - [ ] Capital can always achieve maximum productivity - [ ] Technological advancements become obsolete over time > **Explanation:** Diminishing returns describe how adding more capital results in progressively smaller increases in economic output. ## Which model suggests that policymakers can directly influence growth? - [ ] The Subpar Growth Model - [x] Endogenous Growth Model - [ ] Exogenous Growth Model - [ ] The Nonexistent Growth Model > **Explanation:** The endogenous growth model implies that interventions and policies can significantly spur growth through innovation and education. ## What role does technological change play in exogenous growth? - [x] It acts as an external factor that promotes growth - [ ] It is merely a side effect of growth - [ ] It leads to greater inflation rates - [ ] It discourages investment > **Explanation:** Technological change serves as a catalyst for growth in the exogenous model, facilitating improvements independent of economic conditions. ## The exogenous growth model emphasizes: - [x] External shocks from technological changes as growth facilitators - [ ] Market fluctuations driven by consumer demands - [ ] Inherited environmental factors affecting growth - [ ] Constant economic output due to resource constraints > **Explanation:** The model suggests that external factors are essential for facilitating growth, while market demands play a lesser role. ## How do both exogenous and endogenous growth models view technological progress? - [ ] As non-essential for any economic growth - [ ] As something only the government manages - [x] As an important factor in achieving sustained economic growth - [ ] As a sole contributor to financial crises > **Explanation:** Both models recognize technological progress as vital for ongoing economic growth, each framing it within different contexts. ## Which of the following is NOT a characteristic of the exogenous growth model? - [x] Emphasis on internal human capital development - [ ] Technological advancements promoting growth - [ ] Predictions of diminishing returns to capital - [ ] Uncontrollable external factors influencing growth > **Explanation:** A fundamental trait of the exogenous model is the focus on uncontrollable external factors rather than internal ones like human capital. ## Which key element differentiates the endo-exo growth debate? - [ ] Whether savings rates are relevant - [ ] The existence of economic cycles - [x] The source of technological advancements - [ ] Market price stability > **Explanation:** The fundamental difference is whether technological advancements are seen as internal (endogenous) or external (exogenous) to the economic system. ## How does exogenous growth respond to policy changes? - [ ] Policies have no impact - [x] Policies may create conducive environments but do not change the tech progress - [ ] Policies always lead to increased savings - [ ] Policies will stagnate technology > **Explanation:** Exogenous growth states that while policies can help create better conditions, they do not directly influence technological progress.