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Answer :
Final answer:
An increase in net investment enhances economic growth by raising capital per worker, which in turn increases output per worker. This capital deepening, alongside technological improvements, leads to higher productivity and thus, greater GDP.So the correct answer is a. Capital per worker will increase, leading to increased output per worker.
Explanation:
An increase in net investment leads to faster economic growth primarily because it causes capital per worker to increase, and as a result, the output per worker increases as well. This phenomenon, often referred to as capital deepening, means more machinery, equipment, and technological advances are available for each worker, which enhances their productivity. Moreover, increasing human capital through higher levels of knowledge, education, and skills is also essential in improving productivity. Consequently, both human capital and physical capital investments boost overall productivity, thereby raising GDP.
Technological advancements play a significant role in enhancing economic activity. The introduction of innovative tools and systems, such as GPS technology and Universal Product Codes (barcodes), has revolutionized the way firms track shipments and manage inventories, contributing to more efficient production and distribution processes. These improvements in technology and capital stock elevate the nation's capacity to produce goods and services and boost economic growth.
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