Understanding Capital Deepening's Impact on Productivity

Easy Economic Growth And Development Capital Deepening

Capital deepening is a key component in the process of economic growth and development. It refers to the increase in the amount of capital per worker, leading to higher productivity and efficiency. This concept is crucial for understanding how investments in physical and human capital can drive sustained economic growth.

Which of the following statements most accurately describes the effect of capital deepening on an economy?

Capital deepening always leads to a decrease in unemployment rates.

Capital deepening tends to increase labor productivity without necessarily affecting the number of workers.

Capital deepening results in diminishing returns to capital only when labor supply is held constant.

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