An increase in pollution has caused a permanent increase in the rate of capital depreciation.This would cause
A)an increase in the capital-labor ratio.
B)output per worker to fall.
C)a decline in consumption per worker.
D)the capital-labor ratio to be unaffected.

Question

Quizplus · Accepted Answer

Increased pollution would cause a permanent increase in the rate of capital depreciation, which means that the productive capacity of capital would decline faster with time. This would lead to a fall in output per worker as there would be less capital per worker to work with. Choices A, C, and D are incorrect as they do not accurately reflect the impact of increased pollution on the economy.

An Increase in Pollution Has Caused a Permanent Increase in the Rate