Question

How does higher rate of net capital formation lead to higher level of productivity?

Answer 1

Answer:

Capital formation implies an increase in capital assets such as plant and machinery, buildings and equipment available to the firm.

Now, with a higher net capital formation, means higher capital equipments per unit of labour.

This leads to a higher productivity/efficiency of labour.

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Answer 2

Answer:

Capital formation implies an increase in capital assets such as plant and machinery, buildings and equipment available to the firm. Now, with a higher net capital formation, means higher capital equipments per unit of labour. This leads to a higher productivity/efficiency of labour

Explanation: