Question

what two factors do standard economics consider as the most important in explaining productivity increases?

what two factors do standard economics consider as the most important in explaining productivity increases?

a) increasing capital stock and technological progress

b) increasjng energy supplies and technological progress

c) increasing energy supplies and increasing natural resources

Answer 1

ANSWER-

Productivity of an economy increases when more output can be produced with input (capital and labor) remaining unchaged and if we increase the technological progress it increases the productivity.

(a)  increasing capital stock and technological progress - This is not correct option as increrasing capital does not increase the productivity instead capital remaining unchanged increases the productivity.

(c) increasing energy supplies and increasing natural resources - This is not correct option as natural resources are fixed and cannot be increased.

(b) increasing energy supplies and technological progress - This is correct as technological progress increrases the productivity.

So, the answer is option (b)  increasing energy supplies and technological progress.