Question

why is having more capital not lead to a sustained higher standard of living? draw an appropriate diagram

Answer 1

The reasons for this assertion that having extra capital not lead to a sustained higher well known of living are that investing in capital items as an alternative of human capital leads to increasing income inequality. In a growing economy corporations additionally take on additional borrowing from banks to amplify manufacturing due to greater consumer demand. The mortgage proceeds are commonly used for giant purchases of property such as manufacturing flora and tools. The added manufacturing additionally leads to greater wages and improved employment as greater workers are wished for the enlarge in purchaser demand for a company’s merchandise.
As agencies seem to employ workers to assist with the extend in income, it leads to new job openings in a range of types of employment. Then again if the labor market will become too tight due to an increasing financial system, businesses are compelled to instruct employees for the skillsets wanted in view that there aren’t enough reachable skilled employees.
If the worker remains at the enterprise after the training has been performed, she may additionally develop new ideas and new products for the enterprise. The employee may additionally depart the company later in her profession and use the understanding she realized to start a new organization. Whether the employee stays at the company or begins a new corporation the preliminary funding in human capital will ultimately lead to financial increase.