Suppose an economy experiences a 5% increase in human capital. We know that this will cause:
A) Y/N to increase by exactly 5%.
B) no change in Y/N.
C) a decrease in Y/N.
D) Y/N to increase by more than 5%.
E) Y/N to increase by less than 5%.

Question

Quizplus · Accepted Answer

An increase in human capital typically leads to an increase in output per worker (Y/N), but the increase is usually less than proportional due to diminishing returns to human capital.

Suppose an Economy Experiences a 5% Increase in Human Capital