Final answer:
Capital deepening is when the economy's stock of capital increases relative to its workforce, leading to economic growth.
Step-by-step explanation:
An increase in the economy's stock of capital relative to its workforce is known as capital deepening. Capital deepening is an essential component of economic growth as it refers to the increase in the amount of physical capital available per worker. This can include investments in machinery, equipment, technology, and infrastructure that enhance productivity and efficiency.
For example, when a factory invests in new machinery that allows workers to produce more goods in less time, it leads to higher output and economic growth. Similarly, when a country invests in improving its infrastructure, such as building better roads and ports, it can attract more businesses and stimulate economic growth.
In summary, capital deepening is a crucial factor in driving economic growth as it increases the economy's productivity and output, ultimately leading to higher standards of living for individuals.