Suppose that the capital stock grows at the same rate as the labor force and there is positive technological growth. This would cause
A)an upward movement along the productivity curve.
B)a downward shift of the productivity curve.
C)a downward movement along the productivity curve.
D)an upward shift of the productivity curve.
E)an upward shift of the productivity curve and an upward movement along the productivity curve.

Question

Quizplus · Accepted Answer

When both capital stock and labor force grow at the same rate with positive technological growth, this leads to an increase in productivity. Consequently, the productivity curve shifts upward, indicating that more output is being produced with the same inputs. This shows an increase in the efficiency of production.

Suppose That the Capital Stock Grows at the Same Rate