Diminishing returns to capital prevent capital accumulation alone from explaining sustained economic growth over time.

Question

Quizplus · Accepted Answer

Diminishing returns to capital occur when adding more capital to a production process results in smaller and smaller increases in output. This means that, eventually, simply adding more capital will not lead to sustained economic growth over time. Other factors, such as technological innovation, increased efficiency, and improvements in human capital, are necessary for long-term economic growth.

Diminishing Returns to Capital Prevent Capital Accumulation Alone from Explaining