Question

your book(microeconomic 10th edition) list 5 sources of economic growth. List these sources of growth and choose one to describe in detail. Include an example of the source that you selected, as well as a brief description of how adding to that source year would lead to greater output in the future.

Answer 1

Sources of economics growth are as follows;

a) Natural resources: All natural resources like land, minerals, oil etc impact the economic growth by shifting the production possibility frontier (PPF) outwards since its drawn for a given level of resources in the economy. The change in the quantity and quality of natural resources both impact the growth. These resources could be owned or acquired and thus contributes positively to growth.

b) Labour- the human resouce: The large population contributes to a large labour force in the economy thus, shifting the PPF outwards and fueling growth in the economy.

Today, if there is a huge focus on education and vocational training of the human resources, it will lead to a good quality of human resources and thus leading to many people achieving great results in their sectors and contributing the economic growth in the country.

c) Physical Capital- This is the third factor which exists in the form of machines, buildings or other forms of physical capital which shifts the PPF outwards with its imporovement.

d) Technology- this factor improves the productivity of the labour and capital and thus leads to more production of output and hence, contributing to economic growth.

e) Institutional factors- Apart from capital and technology, smooth functioning of economy requires a well developed banking system, legal system, educational setup and healthcare system.