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Chapter 7: Q 18. (page 186)

What is capital deepening?

Short Answer

Expert verified

Capital deepening refers to a situation where the level of capital per worker is increasing in the economy.

Step by step solution

01

Step 1. Defines capital

All man-made goods that are utilised in the continuing production of wealth are referred to as capital. In economics, capital refers to tangible assets such as machinery and equipment used in the production of goods. A person's or a company's capital is frequently characterized as their wealth or financial power.

02

Step 2. Defines capital deepening.

The term "capital deepening" refers to a situation in which the amount of capital per worker in the economy is increasing. Capital deepening can take the shape of more human capital per worker or more physical capital per worker.

Machines and structures are examples of physical capital, while skills, knowledge, and education are examples of human capital.

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Most popular questions from this chapter

An economy starts off with a GDP per capita of 12,000 euros. How large will the GDP per capita be if it grows at an annual rate of 3% for 10 years? 3% for 30 years? 6% for 30 years?

Would the following events usually lead to capital deepening? Why or why not?

  1. A weak economy in which businesses become reluctant to make long-term investments in physical capital.
  2. A rise in international trade.
  3. A trend in which many more adults participate in continuing education courses through their employers and at colleges and universities.

What do the growth accounting studies conclude are the determinants of growth? Which is more important, the determinants or how they are combined?

What do economists mean when they refer to improvements in technology?

What policies can the government of a free-market economy implement to stimulate economic growth?
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