Question

The term "capital-output ratio" refers to _____________.

• A. the number of units of capital required to produce one unit of output.
• B. the productivity of capital in certain earmarked sectors of the economy over a given period.
• C. rate of return on capital.
• D. rate of growth of investment.

Answer 1

The correct option is A the number of units of capital required to produce one unit of output.

Capital-output ratio provides the ratio of capital invested/employed and thus the yield of output produced using the capital. It gives an indication as to the amount of capital required to produce a single unit of output.
For e.g.: Production of 1 unit of output requires 0.5 units of capital. The capital-output ratio here will be 0.5:1.