If capital per hour of labor increases,GDP per hour of labor

Question

Quizplus · Accepted Answer

Capital per hour of labor is a measure of capital intensity. When the level of capital per hour of labor increases, it indicates that there is more capital available to each worker, which enhances their productivity. As a result, GDP per hour of labor also increases, indicating that the economy is becoming more efficient at producing goods and services. This increase in efficiency is not necessarily linked to technological advancement, as it can also result from increased investment in physical capital, such as machinery and equipment. Therefore, the correct answer is (C) increases for a given level of technology.

If Capital Per Hour of Labor Increases,GDP Per Hour of Labor