Capital deepening increases the marginal product of labor – i.e., it makes labor more productive (because there are now more units of capital per worker). Capital deepening typically increases output through technological improvements (such as a faster copier) that enable higher output per worker.

One obvious difficulty in comparing income across countries stems from the fact that different countries use different currencies. The use of official exchange rates would not provide an adequate comparison.

What factors explain why many low-income countries are not catching up with high-income countries? Failure to enforce the rule of law.

Capital deepening refers to an increase in the amount of capital per person in an economy. A decrease in investment by firms will actually cause the opposite of capital deepening (since the population will grow over time). There is no direct connection between and increase in international trade and capital deepening.

First, the value of used goods that are resold doesn’t count in GDP, though a value-added service associated with reselling the good would be counted in GDP. Second, goods that are produced but not sold are viewed as being purchased by the producer as inventory and thus counted in GDP when they are produced.

U.S. inflation could hit 3% or 4% by the middle of 2022, veteran strategist warns. David Roche, president of investment firm Independent Strategy, said yields could double and that would bring markets “to the crunch point.”

After dipping to 2.5% at the end of 2020, consumers now expect inflation to rise to 3.3%, the highest level in about six years. Higher inflation isn’t necessarily a bad thing for average Americans.