Question

Use an example to explain how investing money in better physical capital (machine, buildings, tools, and equipment) can help a country increase its GDP.

Answer 1

Investing in better physical capital can help a country increase its GDP by increasing the productivity of its workforce. For example, if a country invests in new, more efficient machinery for its manufacturing sector, it can produce more goods in less time, leading to an increase in output and a corresponding increase in GDP. Additionally, the increased efficiency of the machinery can lead to lower production costs, which can further increase the country's GDP.