Chapter 40, Problem 5MCQ

To determine

The correct option for the key source of growth of potential output level.

Answer to Problem 5MCQ

Option c is correct.

Explanation of Solution

Explanation for the correct option:

d.

Human capital is of greater importance for every country’s growth. If any country possesses good human capital sources, then in that scenario it becomes easy and faster for countries to adopt technological changes. Therefore, option d is correct.

Explanation for incorrect options:

a.

Expansionary fiscal policy is one of the tools that is used by the government to regulate economic activities for stable growth.

b.

Expansionary monetary policy is another tool for regulating the money supply in the market.

c.

Rightward shift in the short-run aggregate supply curve can depict only a short-term growth rate.

e.

Since options a and b are incorrect. Therefore, option e is incorrect.

Economics Concept Introduction

Real GDP: Real Gross Domestic Product refers to the measure that determines the value of goods and services which are produced in the country within specific time frame after adjusting with inflation.