πŸ“’ Too many exams? Don’t know which one suits you best? Book Your Free Expert πŸ‘‰ call Now!

  • google app store apple app store
  • βœ–

      Question

      A neutral technological change

      __________
      A Shifts the depreciation line leftward Correct Answer Incorrect Answer
      B Increases the effective labor supply Correct Answer Incorrect Answer
      C Has no effect upon the capital-labor ratio Correct Answer Incorrect Answer
      D Shifts the saving and output curve upward. Correct Answer Incorrect Answer

      Solution

      Impact of Neutral Technological Change:

      1. Output and Savings Curve:
        • A neutral technological change increases the overall productivity, which means that for any given amount of capital and labor, the output produced is higher.
        • This higher output increases the level of income, leading to higher savings if the savings rate remains constant.
        • Therefore, the production function shifts upward, and consequently, the savings curve (which is derived from the output) also shifts upward.

      Practice Next
      ask-question