  We present results of a numerical calculation of lattice QCD with two
degenerate flavors of dynamical quarks, identified with up and down quarks, and
with a strange quark treated in the quenched approximation. The lattice action
and simulation parameters are chosen with a view to carrying out an
extrapolation to the continuum limit as well as chiral extrapolations. Gauge
configurations are generated with a renormalization-group improved gauge action
and a mean field improved clover quark action at three values of $\beta$ and
four sea quark masses. The sizes of lattice are chosen so that the physical
spatial size is kept constant. Hadron masses, light quark masses and meson
decay constants are measured at five valence quark masses. We also carry out
complementary quenched simulations with the same improved actions. The quenched
spectrum from this analysis agrees well in the continuum limit with the one of
our earlier work using the standard action. We find the two-flavor full QCD
meson masses in the continuum limit to be much closer to experimental meson
masses than those from quenched QCD. We take these results as manifestations of
sea quark effects in two-flavor full QCD. For baryon masses full QCD values for
strange baryons are in agreement with experiment, while they differ
increasingly with decreasing strange quark content, resulting in a nucleon mass
higher than experiment. The pattern suggests finite size effects as a possible
origin for this deviation. For light quark masses in the continuum limit we
obtain values which are reduced by about 25% compared to the values in quenched
QCD. We also present results for decay constants where large scaling violations
obstruct a continuum extrapolation. Need for a non-perturbative estimate of
renormalization factors is discussed.
