Question

Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources. Which of the following best sets the stage for economic growth?
The unemployment rate in Indiana rises from 5% to 6%.
The percentage of Indiana residents with a college degree rises from 25% to 30%.
The United States imports more and more low-cost steel from Asian countries.
The Midwest has a devastating drought.

Answer 1

Answer:

The percentage of Indiana residents with a college degree rises from 25% to 30%.

Explanation:

Human capital is one of the most important (according to some economists the most important) aspect for economic growth. If college graduates in Indiana go from 25% to 30%, it means that Indiana's human capital has improved.

With improved Human Capital, now Indiana can produce better steel and corn, or even produce other things, because its college graduates have acquire the necessary knowledge to do so. This will in turn lead to economic growth and a higher standard of living.