Discussion
The technological relationship between the change in capital stock and the change in the level of output is defined as .................... .
Answer: C
It is the Incremental Capital-Output Ratio.
The ICOR is the additional capital needed to produce an additional unit of output, \(\text{ICOR} = \frac{\Delta K}{\Delta Y}\). It expresses a technological relationship between the change in the capital stock (investment) and the change in output, and it is central to the Harrod-Domar model, where the growth rate equals the saving rate divided by the capital-output ratio.
The multiplier relates a change in income to a change in spending, not capital to output, and 'output coefficient' is not the standard name for this ratio.
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