A decrease in the stock of capital may
A)decrease potential GDP.
B)increase labor productivity.
C)increase real GDP.
D)decrease skilled labor.

Question

Quizplus · Accepted Answer

A decrease in the stock of capital, such as a decline in machinery or technology, would lower potential GDP, as there would be fewer resources and tools available for workers to use, which would lead to a decrease in output and productivity. It would also likely lead to a decrease in skilled labor, as fewer resources and opportunities would be available for workers to gain skills and training. An increase in labor productivity and real GDP would require an increase in the stock of capital, not a decrease.

A Decrease in the Stock of Capital May