Differences in output across economies with the same per capita capital stock can be explained by
A)differences in labor.
B)differences in total factor productivity.
C)similarities in total factor productivity.
D)differences in physical capital.
E)similarities in physical capital.

Question

Quizplus · Accepted Answer

While physical capital plays a role in output, economies with the same per capita capital stock can still have different levels of output due to differences in total factor productivity. This includes technology, innovation, and efficiency in production processes, which can vary across economies. Differences in labor also play a role, but total factor productivity is the main determinant of differences in output among economies with the same per capita capital stock.

Differences in Output Across Economies with the Same Per Capita