The level of capital per person would increase if
A)the average saving rate were higher.
B)the output-to-capital ratio increased.
C)the depreciation rate increased.
D)Both A and B.

Question

Quizplus · Accepted Answer

A higher average saving rate would increase the amount of capital available per person, and an increase in the output-to-capital ratio would increase the amount of output produced per unit of capital, allowing for more capital per person. An increase in depreciation rate, on the other hand, would decrease the amount of capital available per person. Therefore, both A and B are correct.

The Level of Capital Per Person Would Increase If