Resources Fuel Economic Expansion

Steps:

• Define economic growth as an increase in real GDP from producing more goods and services.
• Identify key drivers: factors of production including land, labor, capital, and entrepreneurship.
• Evaluate options against these drivers to find the direct cause.
• Select the option that boosts production capacity.

Why B is correct:

• Higher levels of resources (like natural resources, labor, or capital) directly increase productive capacity, per the production function Y = f(K, L, N), where output grows with more inputs.

Why the others are wrong:

• A: Higher imports reduce domestic production by increasing foreign reliance, not growth.
• C: Higher taxation reduces disposable income and investment, slowing economic activity.
• D: Higher unemployment lowers labor input, decreasing overall output and growth.

Final answer: B