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:

Interest Rate

The amount of a loan that is subject to interest charges for the borrower, typically expressed as an annual percentage of the current loan balance.

Consumption

Households' practice of using goods and services.

Interest Rate

The interest rate is the percentage of a sum of money charged for its use, determining the cost of borrowing or the reward for saving.

Income

Money received on a regular basis from work, investments, business, or other sources.