CHAPTER 24PRODUCTION AND GROWTH537over time. But, in fact, the opposite is more nearly true. The prices of most nat-ural resources (adjusted for overall inflation) are stable or falling. It appears thatour ability to conserve these resources is growing more rapidly than their sup-plies are dwindling. Market prices give no reason to believe that naturalresources are a limit to economic growth.QUICK QUIZ:List and describe four determinants of a country’sproductivity.ECONOMIC GROWTH AND PUBLIC POLICYSo far, we have determined that a society’s standard of living depends on its abili-ty to produce goods and services and that its productivity depends on physicalcapital, human capital, natural resources, and technological knowledge. Let’s nowturn to the question faced by policymakers around the world: What can govern-ment policy do to raise productivity and living standards?THE IMPORTANCE OF SAVING AND INVESTMENTBecause capital is a produced factor of production, a society can change theamount of capital it has. If today the economy produces a large quantity of new
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