Question

Which of the following illustrate the use of economic incentives to create the potential for real, long-run economic growth? I. Government grants to students to pay for higher education II. Government tax credits to stimulate research into alternative energy production III. Tariffs and quotas to limit foreign imports

Answer 1

The correct answer is I. Government grants to students to pay for higher education.

Step-by-step explanation:

According to economic theory, the increase of productivity is one of the most important determinants of long-run economic growth. Education has a direct impact on the ability of a society to improve productivity. Thus, when government invests in raising education standards or widening its scope, reaching an increasing amount of individuals, is creating an incentive for sustained economic growth in the long run.

The other two options might also trigger economic prosperity, but are short-term approaches.