An increase in land (or labor)will tend to increase the marginal productivity of capital and thus the rate of interest in at least the short run.

Question

Quizplus · Accepted Answer

An increase in land or labor can enhance the productivity of capital by providing more resources or workforce to utilize the capital efficiently, potentially increasing the marginal productivity of capital. This can lead to higher returns on capital investments, thus potentially increasing the rate of interest in the short run as demand for capital to leverage the increased land or labor may rise.

An Increase in Land (Or Labor)will Tend to Increase the Marginal