Developed Countries That Direct Their Investment Towards Physical Capital Rather

Developed countries that direct their investment towards physical capital rather than research and development can expect to

A) have a higher level of output in the short run and a higher long-run growth rate
B) have a lower level of output in the short run and lower long-run growth rate
C) have a lower level of output in the short run but a higher long-run growth rate
D) have a higher level of output in the short run but a lower long-run growth rate
E) achieve A but only if the level of investment exceeds 1/3 of GDP

Correct Answer:

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