Question

Consider a country that uses its resources to produce consumer goods (e.g., cars and housing) and to provide infrastructure (e.g., roads and bridges). If a change in government policy results in greater production of consumer goods and infrastructure with the same amount of available resources and technology, then what is the likely effect on the economy?

1) The economy will experience higher economic growth and development.
2) The economy will experience lower economic growth and development.
3) The economy will experience no change in economic growth and development.
4) The economy will experience a decline in economic growth and development.

Answer 1

Greater production of consumer goods and infrastructure with the same resources likely leads to higher economic growth and development due to improved productivity and the resultant increase in the standard of living.

Step-by-step explanation:

If a change in government policy results in greater production of consumer goods and infrastructure with the same amount of available resources and technology, the likely effect on the economy would be higher economic growth and development. This is because increasing output with the same resources (improved productivity) generally leads to an increase in the standard of living, as incomes rise and more goods and services are available. Aspects such as public education, low investment taxes, funding for infrastructure projects, and special economic zones can foster this growth. Additionally, the presence of a legal system that enforces contractual rights and property rights underpin this productivity by providing a stable environment for business transactions and investment.