Factors for Future Increase in Growth Rate of Real Output

B

Improvements in technology that permit us to squeeze a larger output from a specific resource supply enhance our productivity and thereby shift the long run aggregate supply curve to the right.

To determine which factor would most likely cause an increase in the growth rate of real output, let's analyze each answer choice:

A. An increase in income redistribution payments from high- to low-income recipients: This factor is unlikely to directly cause an increase in the growth rate of real output. Income redistribution payments involve transferring income from high-income individuals to low-income individuals, which may result in increased consumption and demand for goods and services. However, this alone does not directly affect the production capacity of an economy or the rate at which real output grows.

B. Discovery of a new low-cost method of converting oil shale into petroleum: This factor has the potential to positively impact the growth rate of real output. Discovering a new low-cost method of converting oil shale into petroleum can lead to increased production of petroleum, which is a crucial input in various industries. With a more abundant and affordable supply of petroleum, businesses can reduce their production costs, potentially increase their output, and stimulate economic growth.

C. Higher marginal tax rates: Higher marginal tax rates typically discourage economic activity and investment. They can reduce the incentive for individuals and businesses to work, save, and invest, potentially leading to a decrease in the growth rate of real output. Therefore, higher marginal tax rates are less likely to cause an increase in the growth rate of real output.

D. A decrease in the economy's net investment rate: A decrease in the economy's net investment rate is likely to have a negative impact on the growth rate of real output. Net investment refers to the difference between gross investment (total investment spending in an economy) and depreciation (the decline in the value of existing capital assets). A decrease in net investment implies that the economy is not replacing its depreciated capital stock adequately and may not be investing in new capital to expand production capacity. This can limit the ability to increase real output and slow down the growth rate.

Considering the above analysis, the answer choice that is most likely to cause a future increase in the growth rate of real output is: B. Discovery of a new low-cost method of converting oil shale into petroleum.

It is important to note that this response is based on the information provided and should not be considered as financial or investment advice.