Capital deepening refers to which of the following?

Capital deepening refers to which of the following?

• A. Increasing the number of workers without changing capital
• B. Increasing the capital stock per worker
• C. Reducing investment in capital
• D. Decreasing training for workers

Answer: (B)

Capital deepening means raising the amount of physical capital available for each worker, so the capital-labor ratio increases. When an economy saves and invests more in machinery, buildings, and equipment, each worker has more capital to work with, which typically boosts output per worker and productivity even if the number of workers stays the same and technology doesn't change. This is why increasing the capital stock per worker is the best description. If you simply add more workers without more capital, you’re expanding labor rather than deepening capital. Reducing investment lowers the capital stock, opposite to deepening. Decreasing training affects human capital, not the physical capital per worker.

Capital deepening means raising the amount of physical capital available for each worker, so the capital-labor ratio increases. When an economy saves and invests more in machinery, buildings, and equipment, each worker has more capital to work with, which typically boosts output per worker and productivity even if the number of workers stays the same and technology doesn't change.

This is why increasing the capital stock per worker is the best description. If you simply add more workers without more capital, you’re expanding labor rather than deepening capital. Reducing investment lowers the capital stock, opposite to deepening. Decreasing training affects human capital, not the physical capital per worker.