Which of the following is least likely to affect the long-run growth of an economy?

• A. The accumulation of physical capital
• B. The availability of natural resources
• C. Short-term fluctuations in consumer demand
• D. The level of technological innovation

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the difference between short-run and long-run economic growth. Long-run growth is driven by factors that increase an economy's productive capacity over time, such as capital accumulation, technological progress, and resource availability.
2. Step 2: Identify the factors listed and classify them as either long-run growth determinants or short-run fluctuations. For example, accumulation of physical capital, availability of natural resources, and technological innovation are all fundamental to long-run growth.
3. Step 3: Recognize that short-term fluctuations in consumer demand primarily affect the economy's output in the short run, causing business cycles, but do not change the economy's long-run productive capacity.
4. Step 4: Conclude that among the options, short-term fluctuations in consumer demand are least likely to affect long-run economic growth because they do not alter the underlying factors that determine the economy's potential output.
5. Step 5: Summarize that long-run growth depends on factors that improve productivity and capacity, while short-term demand changes cause temporary deviations from this growth path.