Suppose that the capital stock grows more slowly than the labor force and there is no technological growth. This would cause
A)a downward shift of the productivity curve and a downward movement along the productivity curve.
B)an upward movement along the productivity curve.
C)a downward shift of the productivity curve.
D)a downward movement along the productivity curve.
E)an upward shift of the productivity curve.

Question

Quizplus · Accepted Answer

In this scenario, the economy would experience diminishing returns to labor, which would result in a downward movement along the productivity curve. The decrease in capital stock would cause the productivity curve to shift downward, indicating a decrease in overall productivity.

Suppose That the Capital Stock Grows More Slowly Than the Labor