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    Increased productivity

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    I understand that technology helps to increase productivity , which in turn frees up resources - allowing interest rates to remain lower than otherwise possible. But i am not sure how increased productivity (assuming that is the main benefit of technological advances) drives economic growth. As i understand it economic growth needs to be accomated by an increase in the money supply , which in turn relies on the banking system for loans etc. So why is it that increased productivity leads people to take out more loans - which then leads to more growth ?

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    Increased productivity drives economic growth with investments in new and technologically better physical capital and investments in human capital (education and training). Determining the role of the various factors raising productivity is further complicated by powerful interaction effects. A well-educated workforce is more adept at creating various technological advances that make productivity growth possible; ...

    Solution Summary

    Increased productivity is examined.