Answer :
Final answer:
If depreciation is less than investment, it means the companies are investing more capital than they are losing in depreciation, leading to a net increase in capital and thus an increase in capital per worker. So, the correct answer is: d. capital per worker is rising.
Explanation:
If the level of depreciation is less than the level of investment, it means that companies are still investing more capital into their businesses than they are writing off due to the lessening value of their assets over time.
This results in a net increase in capital, which over time increases the capital per worker.
Think of it this way: if a company invests in 10 new machines but only two machines reach the end of their usable life and are written off as depreciation, net capital has increased.
If this investment results in the company taking on more staff, the capital per worker also increases because there is more capital overall and it's divided among the same number of employees.
This results in a net increase in capital, which over time increases the capital per worker.
Hence, the correct answer is: d. capital per worker is rising.
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