Can you expand on the subject of capital stock and the savingsrate as - ProProfs Discuss
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Can you expand on the subject of capital stock and the savingsrate as a means of increasing production?



Asked by Liliana, Last updated: Sep 26, 2021

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

Capital stock in economic terms refers to investments in equipment, buildings andother physical goods used for production. capital per worker is a measure of howmuch capital is available per worker. when the labour force grows faster thaninvestments in physical goods used for production, for example, the capital per workerdrops. addition to capital stock refers to investments in physical goods used forproduction is increasing.a higher savings rate can lead to greater levels of production as a result of greatercapital stock available per worker, but the returns diminish (i.e., increases lead tosmaller and smaller gains over time). to achieve this increase in production, albeit atdiminishing rates, more and more savings must be generated to support the capitalaccumulation. more savings means consumption must be put off to a future date to agreater degree.
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