A productivity improvement raises steady-state output and consumption per worker in all the ways given below except

Question

Quizplus · Accepted Answer

A productivity improvement can increase the steady-state output and consumption per worker by increasing the productivity of labor, boosting the total factor productivity, increasing the efficiency of resources utilization, and improving the technology of production. However, it cannot decrease the depreciation rate of capital. The depreciation rate of capital is a function of the age and expected useful life of the production assets and the degree of wear and tear. It can be reduced by improving maintenance practices, investing in better-quality equipment, or choosing a longer expected useful life for the production assets. However, these actions are not related to the productivity of the labor force.

A Productivity Improvement Raises Steady-State Output and Consumption Per Worker