Question:
Which of the following would likely contribute to achieve faster rates of economic growth?
(1) More rapid consumption of natural resources.
(2) Protective trade policies.
(3) Higher government funding for research and development.
(4) Increase in consumer subsidies.
(5) Higher taxes on households and firms.
Correct Answer:
(3)
Answer Explanation:
Economic growth requires an outward shift in the Long-Run Aggregate Supply (LRAS) or Production Possibilities Curve. Funding Research and Development (R&D) leads to technological advancements and innovation, which boosts total factor productivity and expands the economy’s productive capacity.
Topic: Economic Growth Year: 2021
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