Which of the following is typically considered the largest contributor to long-term productivity growth in an economy?

• A. Growth in physical capital
• B. Expansion of natural resources
• C. Technological advancement
• D. Increase in labor force

Answer: (C)

Verified step by step guidance

1. Understand the concept of long-term productivity growth, which refers to the sustained increase in the output an economy can produce over time.
2. Recognize that physical capital growth (more machines, tools, infrastructure) contributes to productivity but often faces diminishing returns.
3. Consider the expansion of natural resources, which can boost production but is limited by availability and is not a sustainable long-term driver.
4. Analyze the role of labor force increase, which adds more workers but does not necessarily improve output per worker or efficiency.
5. Identify technological advancement as the key factor because it improves the efficiency of all inputs, enabling higher output without simply adding more resources.