Which of the following statements is false?
A) Poor countries tend to have a low K/L ratio.
B) Rich countries tend to have a high K/L ratio.
C) The K/L ratio is important in determining the productivity of labor.
D) The productivity of labor rises as the K/L falls.
E) The capital-to-labor ratio affects the composition of trade.

Question

Quizplus · Accepted Answer

The productivity of labor typically increases as the capital-to-labor ratio (K/L) increases, not falls. A higher K/L ratio means more capital is available per worker, generally leading to higher productivity.

Which of the Following Statements Is False