ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An aggregate production function exhibits diminishing returns to physical capital when, holding the amount of human capital and the state of technology fixed, each successive increase in the amount of physical capital leads to a smaller increase in productivity.

Detailed explanation-2: -Capital deepening refers to an increase in the amount of capital per worker, either human capital per worker, in the form of higher education or skills, or physical capital per worker.

Detailed explanation-3: -An aggregate production function specifies how certain inputs in the economy, like human capital, physical capital, and technology, lead to the output measured as GDP per capita.

Detailed explanation-4: -Human capital allows an economy to grow. When human capital increases in areas such as science, education, and management, it leads to increases in innovation, social well-being, equality, increased productivity, improved rates of participation, all of which contribute to economic growth.

Detailed explanation-5: -In Macroeconomics, aggregate supply and aggregate demand determine the price level and total amount of national output. In both Micro and Macroeconomics, an increase in human capital increases supply, reducing prices and increasing output.