Capital deepening refers to
- A.going for more fixed capital per worker
- B.emphasis on social overhead capital
- C.constant capital-output ratio
- D.increasing capital-output ratio
Correct answer
Explanation
The correct answer is A, going for more fixed capital per worker. Capital deepening means the stock of capital grows faster than the labour force, so each worker has more machines and tools to work with.
When the capital-labour ratio rises, output per worker usually rises too, which is why capital deepening is a key source of higher labour productivity and wages. It is contrasted with capital widening, in which capital grows only at the same pace as the workforce, so the amount of capital per worker stays the same and new workers are simply equipped like the old ones. Growth models treat capital deepening as one route to rising living standards, alongside better technology and skills.
Option B is wrong because social overhead capital means infrastructure such as roads, power, schools and hospitals, a different idea. Option C is wrong because a constant capital-output ratio describes how much capital is needed per unit of output, not capital per worker. Option D is wrong because a rising capital-output ratio shows capital becoming less productive, which is not the definition of capital deepening.
Exam tip: capital deepening = more capital per worker; capital widening = capital grows with the workforce, per-worker capital constant.
Practice Questions
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