Question about increased productivity

Reference no: EM1373695

The technology helps to grow productivity, which in turn frees up resources - permit interest rates to remain lower than otherwise possible. But i am not sure how increased productivity (suppose that is the main profir 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 ?

Reference no: EM1373695

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