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What is the main reason living standards rise over the long run? (Most important part of productivity function)? A. Technological advancements and innovation

B. Government policies and regulations
C. Natural resource availability
D. Population growth and workforce expansion

1 Answer

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Final answer:

Living standards rise over time mainly due to technological advancements and innovation, which substantially increase productivity and enable economic growth. This is evident in improved GDP per capita and is most notable in regions such as Western Europe and North America. option a.

Step-by-step explanation:

The main reason living standards rise over the long run is primarily due to technological advancements and innovation. The Industrial Revolution, for instance, drastically transformed economies with new production methods and machinery, leading to substantial gains in productivity. As productivity is a measure of how much output can be produced with a given quantity of labor, improvements in this area ensure that the same number of workers can produce more, thus raising living standards.

Countries that have experienced significant economic growth typically have efficient systems to train workers, establish better production machinery, and continuously innovate technology. This growth is reflected in a steady increase in GDP per capita which signals improving living standards. Over time, these productivity and technological gains compound, effectuating the advanced levels of abundance observed in Western Europe, North America, and parts of East Asia.

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