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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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