economics hard MCQ

The Incremental Capital-Output Ratio (ICOR) is used to measure:

  1. The marginal efficiency of capital
  2. The efficiency of investment in generating additional output
  3. The depreciation rate of capital assets
  4. The ratio of foreign to domestic capital

Answer: The efficiency of investment in generating additional output

ICOR indicates how much additional capital is needed to produce one additional unit of output. A lower ICOR signifies high efficiency and productivity of investments, whereas a high ICOR indicates inefficiency, poor infrastructure, or technological bottlenecks in the economy.

Topic Macroeconomics - Growth
Exam Relevance UPSC Prelims, SSC CGL
More economics Questions Back to all questions