The new growth theory states that
A. firms will add to an economy's stock of knowledge capital by engaging in research and development or by contributing to technological change.
B. knowledge capital is subject to decreasing returns at the level of the whole economy but increasing returns at the firm level.
C. firms will add to an economy's stock of physical capital leading to increases in real GDP but at a increasing rate.
D. growth in labor productivity is a significant factor in bringing about long-run growth in real GDP per capita.
Answer: A. firms will add to an economy's stock of knowledge capital by engaging in research and development or by contributing to technological change.