What effect does investing in physical and human capital have on a country’s GDP?
A.
Investing in capital increases a country’s GDP.
B.
Investing in capital slightly decreases a country’s GDP.
C.
Investing in capital greatly decreases a country’s GDP.
D.
Investing in capital has no effect on a country’s GDP.
Please select the best answer from the choices provided
A
B
C
D
A. Investing in capital increases a country’s GDP.
its B
A. Investing in capital increases a country's GDP.
The correct answer is A. Investing in capital increases a country's GDP.
Investing in physical capital involves increasing the stock of machinery, equipment, infrastructure, and other tangible assets. This increases the productive capacity of the country, allowing for higher levels of output and economic growth. It helps industries become more efficient and productive, leading to higher levels of GDP.
Investing in human capital refers to improving the skills, knowledge, and abilities of the workforce through education, training, and healthcare. This enhances the productivity and efficiency of workers, leading to higher levels of output and economic growth. A well-educated and skilled workforce can contribute more to the economy, resulting in an increased GDP.
To determine the effect of investing in physical and human capital on a country's GDP, one can observe the historical data on capital investments and GDP growth rates. By analyzing the relationship between these variables, economists can identify the positive impact of capital investment on a country's GDP.