Answer to Question #239846 in Macroeconomics for NIschal

Question

Some scientists believe that we are rapidly depleting our natural resources. Assume that there are only two inputs (labor and natural resources) producing two goods (concerts and gasoline) with no improvement in society’s technology over time. Show what would happen to the PPF over time as natural resources are exhausted. How would invention and technological improvement modify your answer? On the basis of this example, explain why it is said that “economic growth is a race between depletion and invention.” 

Answer 1

Invention and technology will make people learn on better ways to control the environment. Through technology, people can discover substitutes to gasoline which may be more beneficial to the natural resources. This will help in conserving the environment.