If the capital stock increases, then the economy can produce ____ output with the ____ amount of labor.

Question

Quizplus · Accepted Answer

When the capital stock increases, the productivity of labor also increases, which means more output can be produced with the same amount of labor. Therefore, option C is correct. Options A and B are incorrect, as the output will increase, not remain the same or decrease when the capital stock increases. Option D is also incorrect, as the labor productivity will increase, allowing the economy to produce more output even with less labor.

If the Capital Stock Increases, Then the Economy Can Produce