An increase in the amount of physical capital per worker _____, while technological progress _____.

Question

Quizplus · Accepted Answer

An increase in physical capital per worker moves the economy along the aggregate production function because it results in an increase in output for a given level of technology. Technological progress, on the other hand, shifts up the aggregate production function, meaning that at any given level of physical capital per worker, the economy can produce more output than before. This is because technological progress allows for more efficient or effective use of existing resources, or the development of new resources or production methods altogether.

An Increase in the Amount of Physical Capital Per Worker