An increase in g (the growth rate of the efficiency of labor) _________ the steady-state capital-output ratio and ________ the output per worker in the long-run.

Question

Quizplus · Accepted Answer

An increase in the growth rate of the efficiency of labor (g) decreases the steady-state capital-output ratio because the economy becomes more efficient, requiring less capital per unit of output. It increases the output per worker in the long-run as labor becomes more productive.

An Increase in G (The Growth Rate of the Efficiency