Question

Why is increased technological knowledge for a nation important for growth?

It allows the nation to be more productive in goods and services that it produces.

Increased technological knowledge causes simultaneous increases in human capital and physical capital.

Technological knowledge allows output to increase instantly.

All of the above.

None of the above.

Answer 1

It allows the nation to be more productive in goods and services that it produces.

Step-by-step explanation:

Increased factors of production, whether it be technological knowledge, human capital, physical capital, or organization, all lead to growth because it allows a nation to be more productive in creating goods and services. For example, better tractors, better knowledge of how to use tractors, and continual engineering of more efficient tractors allow the United States to grow many crops efficiently.

Note that increasing one factor of production does not necessarily mean others will increase as well. Also, most improvements in factors of production take time to implement, meaning that an improvement in a factor of production will not always lead to an immediate increase in economic growth.