The capital-labor ratio will tend to decrease over time when
A)investment per worker equals saving per worker.
B)investment per worker is less than saving per worker.
C)investment per worker exceeds depreciation per worker.
D)saving per worker equals depreciation per worker.
E) output per worker exceeds capital per worker.

Question

Quizplus · Accepted Answer

When investment per worker is less than saving per worker, it implies that the economy is not investing enough to replace the existing capital stock that is wearing out or becoming obsolete. This leads to a decrease in the capital-labor ratio over time.

The Capital-Labor Ratio Will Tend to Decrease Over Time When