What is the expected outcome of capital deepening in the country of Econia?

Capital deepening refers to an increase in the amount of capital per worker, which often involves investing in machinery, tools, and technology that enhance the production capabilities of the labor force. When a country like Econia experiences capital deepening, the primary expected outcome is that the productivity of labor will increase. This is because workers are equipped with better resources, which allows them to produce more output in the same amount of time. As productivity rises, it can lead to increased economic growth and higher wages for workers.

In contrast, the other outcomes are less directly connected to the process of capital deepening. An increase in unemployment is usually associated with economic downturns or structural changes in the economy rather than an increase in capital. Deflation could occur in specific scenarios but is not a direct result of capital deepening; in fact, higher productivity typically leads to greater economic activity that can support inflation. Lastly, the cost of living may not necessarily rise significantly as a direct result of capital deepening; instead, improvements in productivity can sometimes offset increases in costs by making goods and services more efficiently.