Answer :
Investment increases the capital stock, while depreciation decreases it, and the net investment determines the overall change in the capital stock. Population growth affects the capital-to-worker ratio and must be balanced by corresponding increases in capital stock. So, the correct answer is option b) True.
The statement that investment, depreciation, and population growth affect the amount of capital per worker, thereby contributing to output per worker is true.
Investment increases the capital stock because it represents new capital being injected into the economy. Conversely, depreciation is a reduction of capital stock due to wear and tear or obsolescence. The net investment in an economy, which is the gross investment minus depreciation, determines whether the capital stock grows or declines. If the investment is higher than depreciation, it results in a positive net investment and, subsequently, an increase in the capital stock.
Additionally, the population growth rate influences the ratio of capital to worker; a higher population growth can dilute the capital per worker unless it is matched or exceeded by the growth of the capital stock itself. So, the correct answer is option b) True.
