Multiple Choice
Which of the following can best be characterized as a subject of macroeconomics?
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1. Introduction to Macroeconomics
Introduction to Economics
Multiple Choice
Economic growth is primarily the result of which of the following?
A
An increase in the productive capacity of an economy
B
A reduction in the money supply
C
A decrease in government spending
D
A rise in unemployment rates
Verified step by step guidance1
Step 1: Understand the concept of economic growth. Economic growth refers to the increase in the output of goods and services in an economy over time, typically measured by the growth rate of real GDP.
Step 2: Recognize that economic growth is driven by factors that increase the productive capacity of the economy. This includes improvements in technology, increases in capital stock, labor force growth, and better education or skills.
Step 3: Analyze the options given: a reduction in the money supply, a decrease in government spending, and a rise in unemployment rates generally do not increase productive capacity; in fact, they can reduce economic activity.
Step 4: Identify that an increase in the productive capacity of an economy means the economy can produce more goods and services, which directly leads to economic growth.
Step 5: Conclude that the primary cause of economic growth is an increase in the productive capacity of the economy, as it enables sustained increases in output.
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