Unformatted text preview: output to 40 books. Notice here that output increased, but the quantity--not the quality--of the capital created this increase. The new upsurge in output is due to an increase in capital expenditures, and not due to technological progress. To claim that either increased capital expenditures or increased technological progress are superior is improper. Instead, each is required for sustained economic growth. Because technological progress is unpredictable--that is, it is present and very important at times and not at others--capital expenditures are able to increase productivity with current capital. When technological progress is ready to provide new capital for production, then the importance shifts. In this way, the forces of capital expenditures and technological progress work hand in hand to increase productivity....
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- Fall '08
- Microeconomics, technological progress