Productivity Fuels Per Capita Economic Growth

Steps:

• Define economic growth as an increase in real GDP, which must outpace population growth for per capita gains.
• Identify that income and consumption per capita rise when output per person increases.
• Evaluate options for factors enabling sustained output growth without proportional population rise.
• Select the option linking efficiency to higher output per input.

Why B is correct:

• Economic growth per capita requires higher productivity, where output per unit of factor inputs (labor, capital) rises, directly boosting income via the production function Y = A * F(K, L), with A as technology/efficiency.

Why the others are wrong:

• A: Maintains output levels, preventing any growth in income or consumption.
• C: Redistributes income but does not create new output or growth.
• D: Increases total population, potentially diluting per capita income without productivity gains.

Final answer: B