Question

Which of the following is the process of increasing the amount of capital used per worker?

Answer 1

The process of increasing the amount of capital used per worker is called Capital Deepening.

Capital Deepening is a term used in economics to describe a situation in which capital increases per worker, is an increase in capital intensity. It is often measured by the stock of capital per hour of work. In general, the economy will expand, and the producitivity of each worker will increase. However, the intensification of the capital factor will not mean that the economic expansion will continue indefinitely, partly due to diminishing returns. The investment is also required to increase the amount of capital available for each worker in the system and therefore increase the proportion of capital with respect to labor, this promote economic growth , because the increase in productivity requieres the accumulation of all stocks of capital per worker.