AP Macroeconomics Question 72: Answer and Explanation
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10. Which of the following is the most likely to be a deterrent to growth in the economy?
- A. Spending on education and training
- B. Increases in capital
- C. Increases in the interest rate
- D. Expenditures on research and development
- E. Increased capacity utilization
Correct Answer: C
C Spending on education and training leads to skilled and productive workers that help the economy grow. Increases in capital give workers more equipment to work with and enable them to expand output. Research and development leads to improvements in technology that assist in the production process. Increased capacity utilization brings production levels from within the production possibility frontier to points closer to the frontier itself, increasing output and growth. Increases in the interest rate, however, deter investment in capital among other sources of growth.