The Economics of Income: Which 'Wood' You Choose?
Source: Council for Economic Education (EconEdLink) | Type: Lesson
A key turning point in a nation's economic development is when it starts to use its resources for long term versus short term purposes. A natural resource example is trees: should people use wood for cooking food or building homes? Simpler societies tend to use wood predominantly as a fuel source (an output), whereas more advanced economies use wood principally as a capital good (an input) with which to build durable social infrastructure, e.g., houses, furniture, books, boats, signs, etc. The same principle applies to all types of a nation's resources (natural, human, educational, scientific, technological, financial, political, et al.) - sustainable economic growth depends on implementing a long term vision of resources as inputs for producing outputs as efficiently as possible.
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