Question

Which of the following is most likely to contribute to economic growth as measured by GDP per capita

A. Rapid population growth

B. Increased stock of physical capital

C. Business cycles peaks

The point of a fluctuation at which economy turns from a trough to a peak is called a/an___

A. Recession

B. Peak

C. Expansion

According to growth accounting studies, the most important in economic growth is

A. Technology.

B. Education.

C. Investment in physical capital.

Answer 1

Question 1

Option B is correct - Increased stock of physical capital

Physical capital are form of inputs used in production process. It includes machinery, building, equipments for working etc. They are important for a production process because they increase productivity. And this increase in productivity leads to economic growth.

Question 2

Option C is correct - Expansion

Trough is the lowest point of the business cycle and peak is the highest. Thus when economy moves from trough (lowest point) to peak (highest point) it is actually expanding for reaching to the peak from the trough and thus this point of fluctuation is called expansion.

Question 3

Option A is correct - Technology

Growth accounting studies measure how much human and physical capital deepening and technology have contributed to economic growth. And the findings of growth accounting studies have proved that technology is the most important factor contributing economic growth. This is because improved technology improves productivity and efficiency of production.