Holding other factors constant, an increase in the capital stock ________ the real wage and ________ employment.
A)increases; increases
B)increases; decreases
C)increases; does not change
D)decreases; increases

Question

Quizplus · Accepted Answer

Increases in the capital stock make workers more productive, which increases the demand for labor and puts upward pressure on wages and increases employment.

Holding Other Factors Constant, an Increase in the Capital Stock