A Leading Environmental Group Recently Published a Report Contending That

question 6

Multiple Choice

A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. How would an economist respond to this report?

• A) An economist would agree with the report, and would point to rising natural resource prices as evidence.
• B) An economist would agree with the report, but wouldn't think it was important because emerging markets are likely to discover additional natural resources.
• C) An economist would disagree with the report, in part because it ignores the mitigating effects of technological change.
• D) An economist would disagree with the report because labour and capital are the primary determinants of growth, and since they are plentiful, growth will not slow down.

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Definitions:

Principal

The primary party involved in a contract or transaction, or the amount of money originally invested or loaned, before interest.

Agent

A person or entity authorized to act on behalf of another, usually in business transactions or negotiations.

Separate Accounts

Financial accounts that are segregated for individual investors, common in insurance and investment management.

Principal's Funds

Resources or capital belonging to the principal in a transaction or investment scenario, as opposed to the agent's or broker's funds.