Investment in both physical and human capital enhances economic growth because it:
A) increases consumption during the current period.
B) makes it possible for individuals to produce more goods and services per hour worked.
C) encourages firms to expand output by employing more low-productivity workers.
D) encourages workers to unionize and, thereby, fight for higher wages.

Question

Quizplus · Accepted Answer

Investment in physical capital, such as machinery, equipment, and infrastructure, can increase the productivity and efficiency of the workforce, allowing them to produce more goods and services per hour worked. Investment in human capital, such as education and training, can also increase the skills and knowledge of the workforce, leading to higher productivity and economic growth. Therefore, both physical and human capital investment can enhance economic growth by increasing the output per worker. Answer A, C, and D are incorrect because they do not explain how investment in physical and human capital enhances economic growth.

Investment in Both Physical and Human Capital Enhances Economic Growth