For the economy as a whole,the relationship between output and capital is typically such that

Question

Quizplus · Accepted Answer

The relationship between output and capital is reflected in the marginal product of capital, which typically diminishes as more capital is added to the production process. This is due to the idea of diminishing marginal returns, where each additional unit of capital contributes less to overall output than the previous unit. Therefore, the marginal product curve is downward-sloping, indicating that output rises at a decreasing rate as capital is accumulating.

For the Economy as a Whole,the Relationship Between Output and Capital