Economics · Macroeconomics - Capital and Growth
In macroeconomic analysis, the Incremental Capital-Output Ratio (ICOR) is often used to assess the relationship between investment and output growth. In this context, consider the following interpretations: I. A higher ICOR suggests that a larger amount of capital investment is required to generate an additional unit of output. II. It reflects the productivity and efficiency with which capital is converted into economic output. III. Changes in ICOR may signal variations in the effectiveness of investment within an economy. Which one of the following conclusions most appropriately follows from an increase in the ICOR?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1The efficiency of capital utilisation in the economy has declined.✓
- 2The economy is operating at its maximum sustainable productive capacity.
- 3The marginal productivity of capital in the economy has increased.
- 4The economy is becoming more efficient in utilising investment.
Correct answer
The efficiency of capital utilisation in the economy has declined.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Macroeconomics - Capital and Growth MCQs →Want more practice questions on Macroeconomics - Capital and Growth?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Macroeconomics - Capital and Growth