Suppose an economy experiences a 5% increase in human capital.We know that this will cause
A)Y / N to increase by more than 5%.
B)Y / N to increase by exactly 5%.
C)Y / N to increase by less than 5%.
D)no change in Y / N.
E) a reduction in output per worker.

Question

Quizplus · Accepted Answer

The increase in human capital typically leads to an increase in productivity, but due to diminishing returns to human capital, the output per worker (Y/N) increases by less than the percentage increase in human capital.

Suppose an Economy Experiences a 5% Increase in Human Capital