The level of the capital stock determines the level of output but not its growth rate,at least not in the very long run.

Question

Quizplus · Accepted Answer

The level of the capital stock determines the level of output in the short and medium run, but in the very long run, technological progress and other factors can lead to increases in output growth rates even with a constant level of capital stock. Therefore, the growth rate of output is not determined solely by the level of capital stock.

The Level of the Capital Stock Determines the Level of Output